Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Intel as a safe dividend play?
Old 02-11-2013, 05:18 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,384
Intel as a safe dividend play?

Now, I am no big player, and most of my money is in IBonds, CDs , Total Index, but I have saved more money this past year, than planned so I rewarding myself by allowing myself to invest $10k in an individual security. Was looking for a stock with a relatively safe dividend, with potential for growth. Anybody follow this company or invest in it? I know Intel is attached to the hip of the stagnant PC market, but it is spending billions ramping up to take on the Qualcomm's and such in the smartphones and tablets, which presently Intel has only been a bit player. They also are looking at the ultra books as way to sell more chips also. As far as my expectations go, if the stock price didn't budge the next 5 years, but the juicy 4.2% plus dividend remained, I would consider it a success. Anyone have any thoughts?
__________________

__________________
Mulligan is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-11-2013, 05:21 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
I own a small position in the name, although I am really far from a tech investor. I think it looks cheap. They have a strong balance sheet and a lot of intellectual capital, so I think they can figure out how to get out of the PC growth slump given some time. But it may be another microsoft, so we should not get our hopes up too high. I'd sell at 30.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 02-11-2013, 05:29 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Jul 2012
Location: Mississippi
Posts: 1,878
I have an open buy limit on INTC @$20, picked some up back in Nov. I don't think business customers will be moving away from PC anytime soon, too much invested in the infrastructure.
__________________
rbmrtn is online now   Reply With Quote
Old 02-11-2013, 05:32 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Posts: 1,649
I own some. Bought at $19.56 and did so primarily for the dividend.
__________________
sheehs1 is offline   Reply With Quote
Old 02-11-2013, 06:01 PM   #5
Thinks s/he gets paid by the post
packrat44's Avatar
 
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
A year ago I was heavy in INTC and liquidated at around $27. I have been watching it closely again looking for an entry point.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
packrat44 is offline   Reply With Quote
Old 02-11-2013, 06:23 PM   #6
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,322
Quote:
Originally Posted by rbmrtn View Post
I have an open buy limit on INTC @$20
Rather than a standing buy order, why not sell 20-strike puts? If INTC is below 20 at expiration of the put, you will own it at a price of 20 less the put premium. If it doesn't go to 20, you will earn the put premium, and you can rinse and repeat. With a standing buy order, you earn nothing if the stock stays above 20.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Old 02-11-2013, 06:51 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
I spent most of my career there leaving in 99/2000 and I'm still active with Intel Alumni association, and have dwindling number of facebook friends who are there in generally senior positions. That said I don't have a more insight than typical analyst does.

Intel and Berkshire are my biggest positions. In Intel's case it is both because I still have a good chunk of shares at $.625 (well under the annual dividend payment!) and don't want to pay tax. But in Intel case it is also because I think it a save dividend play.

Fundamentally INTC is a $25 stock, unless something dramatically happens, Intel gets a real foothold in the smartphone business,or the desktop/laptop and server business completely collapses. I look to buy more when it gets under $20 (write puts) and when it approaches $30 I start writing covered calls.

The core microprocessor business is highly profitable one which is a blessing and curse. The blessing is obvious, the curse is that all the other business that Intel tries to enter look crappy by comparison, and the company has spent tens of billions enter other tech markets with little success. (e.g McAfee).

On the other hand compared to the other 90s tech giant Microsoft, and Cisco, Intel has been pretty shareholder friendly. Increasing the dividend 76% over the last 5 years (and really double digit dividend increase have been going for 20 years). Plus spending many tens of billions for share buybacks reducing the number of share outstanding by 23% over the last decade.

I actually had a lunch conversation with current CEO Paul Otellini (he is retiring in May and will likely move to the chairmen job) about 15 years ago about dividends and he was one of the early booster of them in the company.

Going forward I expect that company will continue to return more money to shareholders via buybacks and dividend increases. Top priority for free cash flow will always be R&D, followed closely by capital to build the 5-10 billion fabrication facilities, but I think 3rd priority will be return money to shareholder rather than investing in new business opportunities.
__________________
clifp is offline   Reply With Quote
Old 02-11-2013, 07:01 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,384
Wow, Clifp when did you buy those shares, 1971? That would always be a good story to tell that you have a stock paying a 100% plus annual dividend.
__________________
Mulligan is offline   Reply With Quote
Old 02-11-2013, 07:28 PM   #9
Thinks s/he gets paid by the post
packrat44's Avatar
 
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
I can not compete with Clifp's cost basis. But having purchased in the early 80s, after all the stock splits my cost basis was fairly low.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
packrat44 is offline   Reply With Quote
Old 02-11-2013, 08:29 PM   #10
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,492
Intel already looks like another Microsoft. They may change course but until they do this looks like a company with declining fortunes.
__________________
MichaelB is offline   Reply With Quote
Old 02-11-2013, 09:30 PM   #11
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,629
I wonder if Intel & Microsoft might become the first tech "utilities". Argument to be made to own 'em mainly for cash flow (inc dividends) with little expectation for major growth. Seems to me industrial/business (inc health care) demands alone will keep these 2 giants at least treading water revenue-wise for years to come while spinning off dividends that beat 10yr Treasuries. Obviously share prices will rise/fall but IMHO you could do OK over time if you pick right entry point.
Disclaimer- I have (smallish) long positions in both stocks.
__________________
ERhoosier is offline   Reply With Quote
Old 02-11-2013, 09:58 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
These stocks might be great, they certainly have high ROE and cash generation and very strong balance sheets and cash positions. But they do have some characteristics that IMO are not ideal for dividend stocks- rapid destruction of their major markets is possible. IOW, technological obsolescence.

It would take longer than many of us have for either MSFT or INTC to go bankrupt.

A stock like P&G or a gas pipeline or an industrial conglomerate like 3M to me at least seem to be on more solid ground, and at times they are also attractively priced.

Of course very little today really qualifies for "buy it and put it in your safe deposit box".

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 02-11-2013, 10:04 PM   #13
Full time employment: Posting here.
Ronnieboy's Avatar
 
Join Date: Feb 2008
Posts: 646
Quote:
Originally Posted by FIRE'd@51 View Post

Rather than a standing buy order, why not sell 20-strike puts? If INTC is below 20 at expiration of the put, you will own it at a price of 20 less the put premium. If it doesn't go to 20, you will earn the put premium, and you can rinse and repeat. With a standing buy order, you earn nothing if the stock stays above 20.
I personally would like to go this route. Is there a good informational book about puts?
__________________
I don't want to spend my entire life at work. I deserve more. - Want2retire aka W2R
Ronnieboy is offline   Reply With Quote
Old 02-11-2013, 10:13 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Quote:
Originally Posted by Ronnieboy View Post
I personally would like to go this route. Is there a good informational book about puts?
Your broker can send you a good pamphlet by the Options Clearing Corp that explains it all. If you have adequate margin or cash in your account, (I think a margin account is required, but maybe not when there is plenty cash.) This is considered a cash covered sale of a put.

This trade is inherently less risky than selling naked calls.

Generally you also have to get permission to trade this level of option before trading.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 02-12-2013, 06:46 AM   #15
Recycles dryer sheets
 
Join Date: Oct 2011
Posts: 122
If you think the PC world will continue to need Intel chips, it may be a decent investment but with how technology changes, it may be dead-end. The 3-year stock trend is slightly upward even though the last year is clearly down.
__________________
KiraC is offline   Reply With Quote
Old 02-16-2013, 08:47 AM   #16
gone traveling
 
Join Date: Jul 2007
Posts: 333
I held some Intel for many years but have sold it all as I moved out of the techs.
__________________
HighRoller is offline   Reply With Quote
Old 02-16-2013, 10:59 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,293
Quote:
Originally Posted by haha View Post
These stocks might be great, they certainly have high ROE and cash generation and very strong balance sheets and cash positions. But they do have some characteristics that IMO are not ideal for dividend stocks- rapid destruction of their major markets is possible. IOW, technological obsolescence.

It would take longer than many of us have for either MSFT or INTC to go bankrupt.

A stock like P&G or a gas pipeline or an industrial conglomerate like 3M to me at least seem to be on more solid ground, and at times they are also attractively priced.

Of course very little today really qualifies for "buy it and put it in your safe deposit box".

Ha
I agree completely! Well put.
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 02-17-2013, 12:02 PM   #18
Recycles dryer sheets
check6's Avatar
 
Join Date: Jan 2009
Posts: 383
Intel has been rapidly expanding. Huge plants to open in Oregon and AZ this year.
__________________
check6 is offline   Reply With Quote
Old 02-17-2013, 12:53 PM   #19
Recycles dryer sheets
 
Join Date: Dec 2010
Posts: 63
I own some INTC in the stock portion of my account. High dividend, not much downside, unclear how much upside. It is a fairly safe holding.
__________________
amfox1 is offline   Reply With Quote
Old 02-17-2013, 05:15 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
Quote:
Originally Posted by haha View Post
These stocks might be great, they certainly have high ROE and cash generation and very strong balance sheets and cash positions. But they do have some characteristics that IMO are not ideal for dividend stocks- rapid destruction of their major markets is possible. IOW, technological obsolescence.

It would take longer than many of us have for either MSFT or INTC to go bankrupt.

A stock like P&G or a gas pipeline or an industrial conglomerate like 3M to me at least seem to be on more solid ground, and at times they are also attractively priced.

Of course very little today really qualifies for "buy it and put it in your safe deposit box".

Ha
I agree Ha. P&G and 3M are inherently safer stocks than and Intel or Microsoft for the reason you stated. But I also think with a 10 or even 30 year time frames none of these companies are likely to go anywhere with their credit ratings as high as Uncle Sam (and deservedly so IMO).
If we compare them by most metrics INTC (and to a lesser extent MSFT) are more attractively valued than PG, or MMM
in order INTC/PG/MMM
PE 9.0/17.4/14.7
5 year PE average 14.3/17.3/14.8
PEG 1.45/1.8/1.76
Price/Cashflow 5.5/13.3/12.8
Dividend Yield 4.19%/2.94%/2.33%
5 year dividend growth rate 14.36%/10.79%/4.21%

Disclosure I own 3M and would be a buyer of PG in the low 50s.
__________________

__________________
clifp is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 11:16 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.