Intel, a leading semiconductor company, recently made changes to its dividend payouts, signaling a shift in its future direction. The company reduced its quarterly dividend per share from $0.365 to $0.125 in spring 2023 as part of its updated capital allocation strategy to expedite the construction of chip manufacturing facilities. Despite this cut, Intel has maintained the dividend at $0.125 per share since then, with plans to increase it by $0.50 annually.
In 2023, Intel spent $3.1 billion on dividend payments, a 49% decrease from the previous year’s high of $6 billion. The company is expected to maintain a similar dividend payout in 2024 as it continues to focus on expanding its manufacturing capabilities and conserving costs due to negative free cash flows resulting from its infrastructure projects.
Over the past three years, Intel has increased its share count by 4.7%, leading to a 1.8% annual growth rate. This trend is expected to continue in 2024, potentially increasing dividend payments from $3.09 billion to $3.14 billion. The current dividend yield of 1.6% is lower than the five-year average of 2.9%, disappointing dividend investors.
Despite the reduced dividends, there are reasons to consider investing in Intel shares. The company is working on building a world-class chip foundry business and targeting a significant portion of the artificial intelligence accelerator market. While dividend increases may be on hold for several years, investors who believe in Intel’s long-term growth prospects may find value in holding the stock.
Overall, Intel’s recent dividend changes reflect its focus on capital allocation towards strategic investments in chip manufacturing facilities. The company’s reduced dividends and negative free cash flows indicate a period of cost conservation as it pursues growth opportunities in emerging markets like artificial intelligence. Investors looking to capitalize on Intel’s future potential may find value in holding onto their investments despite the temporary pause in dividend increases.
Article Source
https://www.fool.com/investing/2024/07/03/what-is-the-dividend-payout-for-intel/
