Saturday, January 15, 2011

Intel Corporation Analysis

Intel Corporation (INTC) has paid dividends now for 18+ years.  They have had at least 5 years of consecutive dividend increases and are a truly ruler in their area of the technology sector.

To start the analysis, I would like to look at their price: as of January 15th 2011 they are trading at $21.08. Their 52 week high is $24.37, giving a 13.5% chance of appreciation on the pricing giving its most recent high. Their low is just at $17.60 over the prior 52 weeks. Therefore, it is somewhere in between. Again, with Intel price is not necessarily the most important thing as you invest for cash flow, and their cash flow always grows every year.

Price to Earnings Ratio: INTC has a current 11.34 P/E ratio, well below the S&P average and according to Morning star is far below the 18 P/E for the industry average. Therefore, INT's stock is relatively cheap to its earnings and is currently undervalued against the average of both the industry and S&P index.

Dividend Yield: My favorite part. Their current dividend yield when trading at $21.08 is 2.99%. It may be a smaller dividend yields than those analyzed in the past but I think with increases in their dividend and their strong performance and strength in their sector, which companies RARELY offer a yield, that this is more than good.   Also, their dividend yield growth rate is an absolute amazing 24.29% since their first issuance back in October of 1992! Therefore, you get (on average) a 24.29% increase yearly to your dividend cash flow from INTC. I also ask - how many jobs have you had that give you a 24.29% increase every year on average?

Payout Ratio: Their dividend is $0.63 per year and their EPS is $1.86. Therefore, 0.63/1.86 = 34%, actual a somewhat low ratio. Since it is in the technology sector which grows at an astounding rate, they tend to retain more earnings to grow, but obviously they have enough earnings to consistently raise that dividend, which is exactly what we want!

Conclusion: Intel is a great pick in your portfolio. They have a strength-hold on the technology division that they are in (Market Cap is over 117 Billion!).  They are a great stock to own for its cash flow as they have recorded past history of amazing returns on their stock price and once placed into a Dividend Reinvestment Plan account, you can increase your cash flow dramatically year after year. At the given price, I would start a position in Intel based on their dividend growth alone and it doesn't hurt how dominant they are!

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.

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