Intel earnings for Q3 2015 come out today among unenthusiastic expectations - but now's the time to be bullish on Intel stock (Nasdaq: INTC).
- Intel Earnings for Q3 2015 (Nasdaq: INTC)
- Intel Dividend History Suggests More Upcoming Hikes (Nasdaq: INTC)
- Does the INTC Dividend Make Intel Stock a Buy?
- Intel's (Nasdaq:INTC) $6 Billion Buyback Scheme Is a Warning Sign – Not a Buy Signal
Intel Corp. (Nasdaq: INTC) reports Q3 2015 results after the close today, and the Intel dividend history has some investors hoping for a payout increase.
Intel Corp. (Nasdaq: INTC) has pioneered the semiconductor industry for more than 46 years - but it's also made tech into a dividend-friendly sector.
The INTC dividend has rewarded investors for 23 years. But is it worth buying INTC stock?
Sadly, some are still looking in the rearview mirror.
Take the case of Intel Corp. (Nasdaq:INTC). The world leader in PC chips has just announced it's borrowing another $6 billion.
Of course, borrowing money isn't necessarily a bad thing. It's the purpose of the debt that matters most.
Here's the thing. Intel is taking on more debt to help it buy back more of its flagging stock. See, the senior brass think that at $20 a share, Intel stock is a great value. And on paper, they're right.
After all, Intel has strong profit margins. Not only that, but its 15% return on assets is solid. It means that for every dollar the firm invests in assets, it earns 15 cents.
Try getting that rate on a bank CD. Or a T-bill, for that matter. Pretty much, it's impossible.
No, the problem for Intel and its shareholders is the stock has become a "value trap." In other words, investors buy the stock because they see they only have to pay nine times earnings and think it's a great bargain.
But, as I like to remind tech investors, a $20 stock that goes down is a lot more expensive than a $200 stock that goes up. Look at it this way, if you had simply bought an index fund tied directly to the S&P 500 you would have made a nice 12% return so far this year.
Holding Intel, however, would have cost you more than 19% as of last week. By buying its own stock, Intel isn't getting anywhere near the return it could by simply buying a basket of equities.
And it's actually much worse than it seems. This next number will blow your mind...