Intel Corporation (INTC) just hit a 52-week low, again. Its dividend is looking very compelling now, at a yield of 4.4%. With its price seemingly a falling knife for the past few months, the question is, is this dividend sustainable, or better yet, could this dividend continue to grow?
There has been lots of discussion on here about soft PC sales, and the fact that Intel is slow in getting into the mobile space.
That said, Intel has been growing its dividend for 9 years, so it seems management is quite committed to raising it. Further, its 5-year dividend growth rate is 12.9%.
Intel's book value per share has been increasing in an uptrend since the last quarter of 2009.
~ Cash from Operations - 5-year ~
Intel is still making a lot of cash from its operations; however, it seems to be plateauing this year, and could further go down with the compressed margins.
Its abundant free cash flow of $3035M, healthy debt-to-equity ratio of 0.15, and a manageable payout ratio of 37% indicate Intel's dividend is safe. However, with the stock price lowering so quickly, the yield is at an enticing 4.4%. Unless the stock price goes back up again (thereby lowering the yield), management maybe less motivated to raise the dividend at the usual growth rate.
~ Further Reading ~
Refer to F.A.S.T. Graphs's Intel Corp: Fundamental Stock Research Analysis for an interactive graph on Intel to view its fundamentals at a glance.
Intel is substantially oversold on the weekly chart. It is sitting at the final support, the 50-day moving average, on the monthly chart. The bottom of the monthly Bollinger Bands bottoms at $19.28.
Please use this article as initial research for Intel, and do due diligence before scaling in.
Disclosure: I am long INTC.
Additional disclosure: Resources: Seeking Alpha, Google Finance