Back in the 1990s, when I wore a younger man’s clothes, Intel (NASDAQ:INTC) was my favorite stock.
The stock started paying dividends in 1992 but it was the splits that were sweet. The shares gained over 3,000% during the 1990s, splitting every time they got to $50 per share, which was often.
I’m obviously older now. So is Intel. As I approach Intel’s regular retirement age of 65, INTC stock is attractive again, but only for income. Intel’s dividend of 31.5 cents per share yields 2.67%. It’s also what you might call “safe as houses,” with the company regularly making three times that amount in net income. There’s also $12 billion in cash and short-term investments in the bank.
The point is that, as times change, so do your investment goals. If your stocks are aging out with you, they have a problem.
Intel Aging Out
Intel has spent this century in a host of troubles of its own making.
Management arrogance has systematically lost its place in mobile computing, in graphics, in memory and modems. Only its microprocessors still generate big profits, and that is thanks to the cloud, which demands low, low prices.
If you’re buying a gaming PC and don’t care about low, low prices you want Advanced Micro Devices (NASDAQ:AMD). AMD was once Intel’s kid brother, but now it’s the one kicking sand in its rival’s face. Even Alphabet (NASDAQ:GOOGL) is walking away from Intel’s designs for its Google Chromebooks.
Intel’s efforts to get into the cellular modem business were such a fiasco that Apple (NASDAQ:AAPL) decided to settle its claims with Qualcomm (NASDAQ:QCOM). It now wants to buy what’s left from Intel at fire sale prices and design its own.
Intel split from Micron (NASDAQ:MU) in the memory business last year and is now going it alone. Press releases call it a winner but it’s not. INTC is also going big into network hardware, recently buying Barefoot Networks but rival Cisco Systems (NASDAQ:CSCO) knows that hardware is becoming software, and they’re right.
Still Intel Bulls
There remain Intel stock bulls.
It is, if you’re an income investor. Intel is not going away. Intel had sales of almost $71 billion last year, and last year it had $29 billion in operating cash flow. A $25 billion debt level on $128 billion in assets is very sustainable. Intel is a fortress and can defend that fortress.
Intel is becoming what International Business Machines (NYSE:IBM) was a decade ago: a company whose best division is the one producing press releases. CEO Bob Swan is an outsider, chosen following a long search after predecessor Brian Krzanich decimated its executive bench.
Any comeback for INTC will be long, and slow. If Intel were a baseball team it would be the New York Mets.
Bottom Line on INTC Stock
You buy different stocks at different points in your life because your investment goals change. The once-speculative INTC stock looks different the closer you are to retirement.
Young investors can take big bets and lose a few. Middle-aged investors will like big growth stocks.
Older investors want stable, secure income. You should compare a stock like Intel to a 30-year bond, which on June 24 was paying 2.59%.
With Intel’s dividend yielding 2.67%, that’s your buy signal. Maybe INTC stock will come back, but we’re getting too old to care anymore.
Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O’Flynn and the Bear , available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AAPL.