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.
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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?
When word got out Friday that Intel Corp. (Nasdaq: INTC) was in talks to buy fellow chipmaker Altera Corp. (Nasdaq: ALTR), Intel stock rose 6.4%.
That tells you how much this deal would benefit Intel. Usually the prospect of a large acquisition causes a company's stock to drop.
But buying Altera will fuel Intel's already thriving data center business - the company's best answer yet to its failure in the mobile market.
Running a business is all about making a profit, so it makes sense that one of the best measures of a company's performance is its profit margins.
Strong profit margins almost always mean a company is well-run, stable, and making money.
A company with healthy profit margins indicates it is efficient at allocating capital and controlling costs, so it can deliver more revenue to the bottom line.
It also means the business has built-in safety. Therefore, a sales slump is less likely to cause an operating loss.
It's like something out of "Star Trek." This new technology could help the chip giant turn things around for good.
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...
The Leaders to Laggards articles described how each company's failure to anticipate changes in their markets undermined their ability to grow revenue. Consequently, their stocks - which many investors rode to massive profits in the 1990s - have languished for the past decade.
Those tribulations have continued since the publication of our series. Microsoft and Cisco have struggled mightily, and as predicted, only Intel has managed to make headway.
Why Intel Is Still a 'Buy'Intel surprised Wall Street with better-than-expected earnings last week - its standout divisions pointing the way to the future growth that for years had eluded the company.
Profits were up 2%, while revenue jumped 21% year-over-year. And gross margins edged up to 64% from 61% in the previous quarter.
Revenue from data centers, which provide the infrastructure for the cloud-computing trend that is now beginning to dominate mobile devices such as tablets and smartphones, was up 15.2% and accounted for nearly 20% of total sales.
Intel sees data centers as a major source of growth. The company expects sales to rise to $10 billion this year and to $20 billion within five years.
An even bigger surprise was the strength in the chipmaker's PC business, which accounted for 64% of Intel's revenue. Sales of the PC division rose 11% despite sluggish growth of about 2.5% in the overall PC market.
"We knew that there would be strength in the servers, but to see double-digit growth in their PC unit is great," Michael Shinnick, a money managerat Wasatch Advisors Inc.,told Bloomberg News.
Money Morning Chief Investment Strategist Keith Fitz-Gerald is back on FoxBusiness' "Bulls & Bears" program for a look at technology companies' earnings reports. While some are thriving, others like Intel Corp. (Nasdaq: INTC) are stuck in a stock price standstill. Watch Fitz-Gerald and his "B&B" counterparts debate whether or not Intel is a "Buy."
The highly-anticipated chips could deliver one of the biggest advances in years for the
technology that powers laptop and desktop computers, according to a report in The Wall Street Journal.
The new chips are designed to incorporate the microprocessors that calculate formulas and run the software on most personal computers with the more obscure graphics processing units (GPU) - the devices responsible for rendering images in video games and movies and converting audio files for listening.
There are very few multi-national companies that are not being seriously impacted by these changes.
However, there is one company that should be a safe beacon in these stormy market conditions: Intel Corp. (Nasdaq: INTC).
The world's biggest chipmaker will build a new factory in Oregon and upgrade four existing plants in Arizona and Oregon. The move emphasizes Intel's position as the biggest manufacturer of microprocessors and its ability to keep up with the semiconductor world's rapid and expensive pace.
The upgraded Intel plants will produce the company's most technologically advanced chips and support its move to 22-nanometer production. This next generation of chip production reduces the line widths on circuits, which lowers costs and improves capability. Currently chips are made with a 32-nanometer process.
But will other tech giants really follow suit and institute dividends of their own?
Cisco Chief Executive Officer John Chambers announced the payout last Tuesday, saying the networking giant would reward shareholders with a dividend likely to yield between 1% and 2%. The exact amount will be determined in the coming months while the company considers developments on the tax front and broader market conditions.
Stocks failed to get traction in the middle of last week after Alcoa (NYSE: AA) and Intel (Nasdaq: INTC) earnings reports underwhelmed investors, and Friday they spun off the road. The culprit: Fears that recent earnings gains represented a peak, and that weak readings on the economy were more representative of current conditions.
Retail sales disappointed and the Federal Reserve cut its 2010 growth forecast. Even word that Singapore grew at a record pace of 19.3% in the second quarter couldn't lift the air of despondency on Wall Street.