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Investing

How High Are Intel Dividend Aspirations (INTC)

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By Douglas A. McIntyre Updated Published

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Intel Corporation (NASDAQ: INTC) is defying the old status quo of big technology companies which do not pay what most would consider real dividends.  Today’s quarterly dividend hike to $0.1575 from $0.14 is far from the first hike.  Even when you consider a 2% share gain to $20.20, the old dividend yield was already 2.7%.  The new dividend yield is 3.1% based on today’s share price.  It begs one to ask, “How high does Intel want its payout to be?”

As a share’s price rises, its yield decreases for investors paying higher share prices.  To illustrate this, Intel’s stock could rise to $25.00 and the new dividend yield after the increase would still be just a tad above 2.5%.

The 52-week trading range is $12.05 to $21.27, but that is misleading because Intel was a $25.00 stock less than two years ago.  This marks the fourth dividend hike since the end of 2005.

The company has incredibly high margins and is sitting on a $16 billion mountain of cash.  With the company now back to making over $0.30 per quarter in earnings, this dividend is still cash-accretive by far.   Assuming Intel meets its December 2010 fiscal targets of $1.46 and keeps that dividend static for 2010 at $0.63 and assuming it makes no solid cash acquisitions, then Intel can still add about $4 billion or more to cash in 2010.

Intel may wait for higher share prices before it boosts its dividend again, but the company has proved it wants to increase its dividends through time just like a solid industrial company.  Or even a utility.

JON C. OGG

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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