Is Intel's Failure To Hike Its Dividend A Sign Of Things To Come?

| About: Intel Corporation (INTC)

On Thursday, Intel (NASDAQ:INTC) announced their quarterly dividend payout would remain the same, dashing hopes of an annual hike. I was quite surprised by the lack of a hike, as management seems to have forgotten about shareholders. The article below will discuss the inconsistent dividend history of INTC and a viable income producing alternative.

At first glance, INTC is very appealing choice for an income seeking investor. INTC provides a well known brand name in a growing industry with an above average yield. The dividend rate of approximately 3.8% is far superior to the 10 year U.S. Treasury rate currently quoted at a yield of 2.56%. The appeal is further enhanced due to the favorable U.S. tax treatment of dividends. Upon review of the companies past dividend hikes and capital needs a different picture emerges.

INTC competes in the capital intensive semiconductor industry. The company consistently needs to reinvest large sums of capital back into refitting their fabrication plants with the newest equipment to continue to provide cutting edge chips. Most will argue the manufacturing advantage is INTC greatest asset, yet to continue to maintain this asset is quite costly. To further add some clarity to the overall industry, the industry is a cyclical one that exhibits peaks and troughs that can erode cash flow. To its credit, INTC has successfully managed most cycles however the cyclical effect can be seen in its dividend policy.

Declared Date

Record Date

Payable Date

Amount

Type

07/25/13

08/07/2013

09/01/2013

0.2250

Regular Cash

03/21/13

05/07/13

06/01/2013

0.2250

Regular Cash

01/23/13

02/07/13

03/01/13

0.2250

Regular Cash

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Declared Date

Record Date

Payable Date

Amount

Type

09/24/12

11/07/12

12/01/12

0.2250

Regular Cash

07/26/12

08/07/12

09/01/12

0.2250

Regular Cash

03/22/12

05/07/12

06/01/12

0.2100

Regular Cash

01/25/12

02/07/12

03/01/12

0.2100

Regular Cash

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Declared Date

Record Date

Payable Date

Amount

Type

09/22/11

11/07/11

12/01/11

0.2100

Regular Cash

07/27/11

08/07/11

09/01/11

0.2100

Regular Cash

03/18/11

05/07/11

06/01/11

0.1812

Regular Cash

01/24/11

02/07/11

03/01/11

0.1812

Regular Cash

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Declared Date

Record Date

Payable Date

Amount

Type

09/24/10

11/07/10

12/01/10

0.1575

Regular Cash

07/22/10

08/07/10

09/01/10

0.1575

Regular Cash

03/19/10

05/07/10

06/01/10

0.1575

Regular Cash

01/22/10

02/07/10

03/01/10

0.1575

Regular Cash

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Declared Date

Record Date

Payable Date

Amount

Type

09/10/09

11/07/09

12/01/09

0.1400

Regular Cash

07/16/09

08/07/09

09/01/09

0.1400

Regular Cash

03/19/09

05/07/09

06/01/09

0.1400

Regular Cash

01/23/09

02/07/09

03/01/09

0.1400

Regular Cash

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Declared Date

Record Date

Payable Date

Amount

Type

09/10/08

11/07/08

12/01/08

0.1400

Regular Cash

07/17/08

08/07/08

09/01/08

0.1400

Regular Cash

03/20/08

05/07/08

06/01/08

0.1400

Regular Cash

01/17/08

02/07/08

03/01/08

0.1275

Regular Cash

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Declared Date

Record Date

Payable Date

Amount

Type

09/11/07

11/07/07

12/01/07

0.1125

Regular Cash

07/12/07

08/07/07

09/01/07

0.1125

Regular Cash

03/22/07

05/07/07

06/01/07

0.1125

Regular Cash

01/18/07

02/07/07

03/01/07

0.1125

Regular Cash

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Tables taken from Intel dividend history from their website.

Due in my opinion to the cyclical nature of INTC core business, the company has failed to raise the dividend every year. If we examine the charts above, INTC failed to raise the dividend in 2009 and actually went 7 quarters before raising it in 2010. 2009 happened to be a very difficult year for most companies however quite a few still managed to take care of their shareholders. With Thursday's announcement, INTC surprisingly failed to raise the dividend. The company has now gone five quarters without a hike which I find disappointing.

INTC recently lowered their earnings forecast further disappointing investors. The business seems to be in a cyclical downswing with the company looking to conserve cash as witnessed by their decision to cut capital expenditures. I believe the company's core business is losing share to mobile devices where the company has failed to gain much traction. For a more in depth discussion on INTC please click here. Why settle for mediocre dividend performance when you can have steady dependable bumps combined with a high yield.

Phillip Morris International (NYSE:PM) offers exactly what INTC fails at. PM offers consistent, dependable dividend hikes with a very pro shareholder management team. As we can see from the tables below, PM raises the dividend like clockwork irrespective of business conditions. Even in the difficult 2009 time frame, PM came through raising the dividend from .54 to .58 cents. For a more in depth review of PM please click here.

Declaration date

Ex-dividend date

Record date

Payment date

Mar 13, 2013

Mar 26, 2013

Mar 28, 2013

Apr 12, 2013

Jun 12, 2013

Jun 25, 2013

Jun 27, 2013

Jul 12, 2013

Sep 11, 2013

Sep 24, 2013

Sep 26, 2013

Oct 11, 2013

Dec 11, 2013

Dec 23, 2013

Dec 26, 2013

Jan 10, 2014

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Click to enlarge

Dividend history

Declared

Ex-date

Record

Payable

Amount

Type

Jun 12, 2013

Jun 25, 2013

Jun 27, 2013

Jul 12, 2013

$0.85

Regular Cash

Mar 13, 2013

Mar 26, 2013

Mar 28, 2013

Apr 12, 2013

$0.85

Regular Cash

Dec 12, 2012

Dec 24, 2012

Dec 27, 2012

Jan 11, 2013

$0.85

Regular Cash

Sep 12, 2012

Sep 25, 2012

Sep 27, 2012

Oct 11, 2012

$0.85

Regular Cash

Jun 13, 2012

Jun 25, 2012

Jun 27, 2012

Jul 12, 2012

$0.77

Regular Cash

Mar 14, 2012

Mar 27, 2012

Mar 29, 2012

Apr 12, 2012

$0.77

Regular Cash

Dec 7, 2011

Dec 20, 2011

Dec 22, 2011

Jan 10, 2012

$0.77

Regular Cash

Sep 14, 2011

Sep 23, 2011

Sep 27, 2011

Oct 11, 2011

$0.77

Regular Cash

Jun 8, 2011

Jun 21, 2011

Jun 23, 2011

Jul 11, 2011

$0.64

Regular Cash

Mar 9, 2011

Mar 22, 2011

Mar 24, 2011

Apr 11, 2011

$0.64

Regular Cash

Dec 8, 2010

Dec 21, 2010

Dec 23, 2010

Jan 10, 2011

$0.64

Regular Cash

Sep 10, 2010

Sep 22, 2010

Sep 24, 2010

Oct 8, 2010

$0.64

Regular Cash

Jun 9, 2010

June 22, 2010

June 24, 2010

Jul 9, 2010

$0.58

Regular Cash

Mar 11, 2010

Mar 23, 2010

Mar 25, 2010

Apr 9, 2010

$0.58

Regular Cash

Dec 9, 2009

Dec 23, 2009

Dec 28, 2009

Jan 11, 2010

$0.58

Regular Cash

Sep 15, 2009

Sep 24, 2009

Sep 28, 2009

Oct 9, 2009

$0.58

Regular Cash

Jun 10, 2009

Jun 22, 2009

Jun 24, 2009

Jul 10, 2009

$0.54

Regular Cash

Mar 12, 2009

Mar 23, 2009

Mar 25, 2009

Apr 9, 2009

$0.54

Regular Cash

Dec 16, 2008

Dec 23, 2008

Dec 26, 2008

Jan 9, 2009

$0.54

Regular Cash

Aug 29, 2008

Sep 11, 2008

Sep 15, 2008

Oct 10, 2008

$0.54

Regular Cash

Jun 18, 2008

Jun 26, 2008

Jun 30, 2008

Jul 10, 2008

$0.46

Regular Cash

Click to enlarge
Click to enlarge

Dividend table courtesy of PMI

Consistently and dependability are key factors when investing in income producing companies. An income seeking or dividend growth investor tends to choose more stable names forgoing the chance for outsized capital gains. Instead they look to attain wealth over time by allowing the magic of compounding work to their advantage. PM in my opinion offers a more dependable income producing alternative to INTC. Thank you for reading and I look forward to your comments.

Disclosure: I am long PM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Thank you for reading the article. Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.