Intel, a major player in the semiconductor industry, is known for its history of offering generous dividends to investors. However, the company made a significant change to its dividend policy last year.
In spring 2023, Intel reduced its quarterly dividend payout from $0.365 per share to $0.125 per share. This move was part of the company’s updated capital allocation strategy to focus on accelerating the construction of chip manufacturing facilities. Despite the initial cut, Intel has maintained the $0.125 per share dividend since then, with plans to increase it by $0.50 per share 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 invest in expanding its chip manufacturing capabilities, which requires significant capital expenditure. Currently, Intel’s free cash flows are negative due to these infrastructure projects.
Over the past three years, Intel has increased its share count by 4.7%, resulting in an annualized growth rate of 1.8%. This ongoing dilution is expected to continue in 2024, potentially increasing the total dividend payouts to $3.14 billion.
Despite the reduced dividend payouts, some investors may still find value in Intel’s stock. The company is actively working on building a world-class chip foundry business and targeting a significant share of the artificial intelligence accelerator market. While dividend increases may be on hold for several years, the potential for long-term growth in these areas could attract investors.
Before investing in Intel, investors are advised to consider their investment goals and risk tolerance. Analysts at The Motley Fool Stock Advisor have identified the top 10 stocks for investors to buy now, and Intel is not among them. The service offers a blueprint for success in the stock market, including guidance on portfolio construction and monthly stock picks. The performance of the Stock Advisor service has significantly outperformed the S&P 500 since 2002.
In conclusion, Intel’s dividend policy underwent a significant change in 2023, with a reduction in payouts to focus on strategic investments. Despite the lower dividend yield, the company’s growth prospects in chip manufacturing and AI technology could make it an attractive investment opportunity for some investors.
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https://finance.yahoo.com/news/dividend-payout-intel-153300081.html