Could Intel Raise Its Dividend 50%?

In the following, Motley Fool analyst Eric Bleeker discusses the possibility that Intel (Nasdaq: INTC) increases its dividend 50% and becomes a dividend monster.

Doing so wouldn't be unprecedented, as Cisco (NASDAQ: CSCO  ) increased its dividend 75% in 2012.  Oracle (NYSE: ORCL  ) also made a bold move ahead of the fiscal cliff by moving up its next three quarterly dividend payments into 2012.   

Intel's current dividend yield of 4.3% already surpasses that of Apple (NASDAQ: AAPL  ) and Microsoft (NASDAQ: MSFT  ) at 2% and 3.5%, respectively. Still, there is evidence to suggest the company could support a 6% dividend yield.

Intel has a rock-solid balance sheet with cash in excess of debt levels, but much of the cash is held overseas and would be subject to burdensome taxes if used as dividend payments. However, the company can continue to tap the debt markets as a source of cheap funding. Demand for high-quality corporate bonds, such as Intel, remains as robust as ever. The company recently issued $6 billion in debt, with the five-year maturity yielding just 1.35%. 

So in what direction does the CEO want to take Intel? Does he want to muddle forward with so-so results from excessive capital expenditures? Or does he want to slow the mobile growth division where the company already lags behind, cut costs in the PC and server segments, and use opportunistic debt financing to become a dividend monster? 

See more in the following video.

As Eric details, when it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Better yet, you'll continue to receive updates for an entire year. Click here now to learn more.


Read/Post Comments (2) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 10, 2012, at 8:02 PM, SimchaStein wrote:

    Crazy article, but fun. Better idea. Trim the sails throughout. Make chips for Apple - accept the low margin. Intel's biggest durable asset is that they're the best chip designer/maker. For new growth look to Silicon Photonics and Nanotech. That plays to their strengths.

  • Report this Comment On December 10, 2012, at 8:26 PM, Chippy55 wrote:

    I have friends who are in Apple stock and they are all ga ga when it's climbing $10 and $20 per day, but they never sell, so I hear the whining when it starts to plummet. I relented for 2 days before informing them that Apple had just passed the "Death Cross" meaning the 50 day MA crossed the 200 day MA, but then said to myself, "They might think I'm rubbing it in" so I waited, but then heard it mentioned on TV, so I informed them with the TV show as the source. Anyhoo, they look at Intel as "old school" and of course Apple is "new school", but what about Intel's dividend I counter. It hasn't been that long that Apple has paid a dividend, I marveled at it's long run up and could not believe that Jobs was just sitting on that mountain of cash. It reminded me of another Liberal, Clinton, who had 500 billion in a tax surplus (thanks to policies instituted by Mr. Reagan and Mr. Bush) and Conservatives told Clinton, "You have to give the money back", and Clinton replied, "We're smarter, we know how to spend that 1/2 trillion better". So, Clinton kept the cash, and Jobs sweet talked everyone, and also kept the cash. Suggestions that Intel might increase their dividend 50% should make these "old school" antagonists wake up. I just added 1 1/2 times the amount of shares I previously owned because the chart tells me Intel is a screaming buy, way below the 50, 100, and 200 day MA. I'm happy, and could be happier in 6 months. We'll see.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2147584, ~/Articles/ArticleHandler.aspx, 10/23/2014 5:37:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement