Current Dividend Yield: 4.4%
Performance So Far in 2012: -16%
Intel’s dividend situation is much like Hewlett-Packard’s in that it’s a product of both increasing distributions (INTC upped its quarterly payout from 21 cents to 23 cents this summer) and share price declines (though admittedly not the kind of drastic declines seen at HP). And like Hewlett-Packard, Intel’s declines have come amid worries about an inability to navigate a post-PC world.
Unlike Hewlett-Packard, Intel might just be a decent turnaround play.
Intel remains the world’s largest semiconductor manufacturer on the planet with almost 16% market share in 2011 — that trumps the No. 2 and No. 3 players combined. And, thanks to its big-time drubbing in 2012, it’s selling at attractive valuations such as a forward price-to-earnings ratio of around 10 and a five-year price/earnings-to-growth ratio of around 0.8. Plus, Intel’s place inside Microsoft’s Surface tablet at least gives it some shot of making ripples in the mobile space.
Yes, it’s a riskier play, at least as far as blue-chip stocks go. Berkshire Hathaway (NYSE:BRK.A, BRK.B) has lost faith in the stock, its most recent earnings report showed declines, and again, the waning of the PC age is a very real threat to Intel.
However, Intel remains the top dog in a broader industry that’s still very important to the future of technology, it throws off a dividend well north of 4% backed by oodles of cash, and it’s currently selling on the cheap.