Intel (INTC) is a Top Dividend Stock Right Now: Should You Buy?
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Intel in Focus
Headquartered in Santa Clara, Intel (INTC) is a Computer and Technology stock that has seen a price change of -12.5% so far this year. The world's largest chipmaker is currently shelling out a dividend of $0.33 per share, with a dividend yield of 2.52%. This compares to the Semiconductor - General industry's yield of 1.06% and the S&P 500's yield of 2.41%.
Looking at dividend growth, the company's current annualized dividend of $1.32 is up 4.8% from last year. Over the last 5 years, Intel has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.88%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Intel's current payout ratio is 26%, meaning it paid out 26% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for INTC for this fiscal year. The Zacks Consensus Estimate for 2020 is $4.89 per share, which represents a year-over-year growth rate of 0.41%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, INTC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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