Intel's (NASDAQ:INTC) Dividend Will Be $0.365

Simply Wall St
·3 min read
1

The board of Intel Corporation (NASDAQ:INTC) has announced that it will pay a dividend of $0.365 per share on the 1st of March. This makes the dividend yield 5.2%, which will augment investor returns quite nicely.

Check out our latest analysis for Intel

Intel's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend made up quite a large portion of free cash flows, and this was made worse by the lack of free cash flows. This is a pretty unsustainable practice, and could be risky if continued for the long term.

Looking forward, earnings per share is forecast to rise by 12.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 71% by next year, which is in a pretty sustainable range.

historic-dividend
historic-dividend

Intel Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $0.84 total annually to $1.46. This implies that the company grew its distributions at a yearly rate of about 5.7% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. However, Intel's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

Our Thoughts On Intel's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Intel's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 3 warning signs for Intel that investors need to be conscious of moving forward. Is Intel not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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