Intel Corporation (INTC) designs, manufactures, and sells integrated circuits for computing and communications industries worldwide. It offers microprocessor products used in desktops, workstations, servers, embedded products, communications products, notebooks, netbooks, mobile Internet devices, and consumer electronics. It has been attempting to diversify by making chipsets for embedded designs for industrial equipments, point-of-sale systems, panel PCs, automotive information/entertainment systems, and medical equipment. The range of fair value is calculated as $12.6 to $16.2. Conclusion: I like INTC technological driven supremacy in its product segment. It has been raising dividends for last five years only. This growth seems be due to historically low payout factor instead of growth in EPS. The stock’s current risk-to-dividend rating is 2.3 (medium risk). This is very close to my high risk point of 3.0. I will continue to hold my existing INTC stock in my dividend portfolio. However, I will only add if the price goes to lower end of my fair value range. Full Disclosure: Long on INTC.
INTC is not a dividend achiever. It has been paying growing dividends for last 5 calendar years. The latest dividend increase was in February 2010. I had last reviewed INTC in July 2009. My objective here is to analyze INTC is a continuing to be a good dividend growth stock and how it will rate on my scale of risk-to-dividends.
Trend Analysis
Here I am looking at trends for past 10 years of corporation’s revenue and profitability. These parameters should show consistently growth trends. The trend charts and data summary are shown in images below.
Risk Parameter Calculation
Here I use the corporation’s financial health to assign a risk number for measuring risk-to-dividends. The risk number for risk-to-dividends is 2.29. This is a medium risk category (very close to being high risk) as per my 3-point risk scale. The increased payout factor and erratic EPS makes it a medium risk-to-dividends.
Quality of Dividends
This section measures the dividend growth rate, duration of growth, consistency over a period of past five years.
Fair Value Calculation
This section determines what price I should pay to buy a given stock
Qualitative Analysis
INTC continues to remain un-challenged leader in the computing microprocessor market segment. Its sole challenger, AMD keeps raring its head every once in a while. However, it has not seen any sustained challenge. On occasions this makes the company complacent and ignoring what the markets wants.
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