Is Intel’s Dividend Cut a Sign of Deeper Troubles?

Should You Buy Intel Stock? Top Analyst Raises Red Flags

Intel (INTC:NSD), a leading chip manufacturer, made a tough decision on Wednesday that left investors disappointed. The company’s Board of Directors announced a 66% reduction in its quarterly dividend, dropping from $0.365 per share to $0.125 per share. The dividend cut will also reduce the annual payout from $0.50 to $0.30 per share. This move came as a surprise to many, and it is set to take effect on June 1, 2023, with stockholders of record on May 7, 2023, set to receive the reduced payout.

Intel justified the dividend cut, stating that it was part of the company’s long-term strategy to create value for its shareholders. The decision to cut the dividend follows Intel’s poor Q4 2022 results, which saw the company miss its revenue target due to supply chain disruptions and increased competition. Additionally, Intel’s Q1 2023 revenue outlook fell below analysts’ expectations, with projected revenue of $10.5 billion to $11.5 billion and an adjusted loss of $0.15 per share.

These poor results and projections have been linked to the ongoing chip shortage, which has forced companies to delay orders and cut back on production. Intel has also been hit by a delay in orders from Taiwan Semiconductor, a major supplier of semiconductor chips. These factors have compounded Intel’s struggles and prompted the company to take a tough stance on capital allocation.

Intel’s move to cut its dividend is expected to help the company allocate more resources to research and development, with a focus on developing new products to compete in a challenging market. The company’s decision to prioritize long-term value over short-term gains is a testament to its commitment to creating sustainable growth and shareholder value.

In conclusion, Intel’s decision to cut its dividend is a tough but necessary move, given the company’s ongoing struggles. While the reduction may disappoint some investors in the short term, it is expected to position Intel for sustainable growth in the long run.

 

Intel Stock Forecast:

Based on the Intel stock forecast from 35 analysts, the average analyst target price for Intel Corporation is USD 29.52 over the next 12 months. Intel Corporation’s average analyst rating is Hold.

Stock Target Advisor’s own stock analysis of Intel stock is Slightly Bearish, which is based on 7 positive signals and 9 negative signals. At the last closing, Intel stock price was USD 26.06. Intel Corporation’s stock price has changed by -9.01% over the past week, -10.81% over the past month, and -42.14% over the last year.

 

Company Profile:

Intel Corporation designs, develops, manufactures, markets, and sells computing and related products worldwide. It operates through Client Computing Group, Data Center and AI, Network and Edge, Mobileye, Accelerated Computing Systems and Graphics, Intel Foundry Services, and Other segments.

It serves original equipment manufacturers, original design manufacturers, cloud service providers, and other equipment manufacturers. The company was incorporated in 1968 and is headquartered in Santa Clara, California.

 

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