Microchip Technology, symbol MCHP
is company very similar to Intel. Both
have qualified as dividend machines in 2011 and 2012 and now again in
2013. Their dividend fundamentals are
similar. Often times, I own more than
one company in a given space in order to diversify my holdings within an
industry.
SIMILARITY TO INTEL
Microchip, like Intel, produces
computer chips. Both companies are
mature. Investors do not look to either
company for rapid growth. Their stock
prices are stuck in a trading range and some analysts consider them dead
money. Yet each company has been a
money machine for income investors.
|
DIVIDEND MACHINE
|
2/7/2013
|
|
Microchip
Technology
|
MCHP
|
|
Price when profiled
|
$33.94
|
|
Last 4 Qtrs Earnings
|
$1.40
|
|
Last 4 Qtrs Dividends
|
$1.40
|
|
Current Qtr Dividend
|
$0.353
|
|
Annualized Div Yield
|
4.16%
|
|
No. Years Div Increase
|
Since 2002
|
|
Debt/Equity ratio
|
0.49
|
DIVIDEND FUNDAMENTALS
Microchip is a much smaller
company than Intel and the stock price is a bit more volatile. Over
the past year, MCHP bought
another company in order to diversify the product line. The acquisition was viewed with great
skepticism and the stock price suffered.
In 2011 MCHP traded around $33 per share when I profiled it. Early in 2012 MCHP’s stock traded around $37
per share when I profiled it. Later in
2012 MCHP’s stock price slipped back to $33 per share.
Today, MCHP announced their most
resent earnings and they beat estimates on both the top line and the bottom
line. Just as they have in the past,
MCHP rewarded it shareholders by again increasing the dividend.
The table above presents MCHP’s
dividend fundamentals. With a yield of
4.16%, MCHP is a good buy. They have a
strong balance sheet and have shown they know how to use their cash. In the past, MCHP has also offered covered
call opportunities. With the good
earnings news, tomorrow may be a good time to look for covered calls.
DIVERSIFICATION
MCHP, as a small cap. company,
provides a little diversification in the computer chip industry. I like to own more than one stock in
industries as big as this. Intel is a
large cap stock.
Consider owning both of these
companies in the income producing portion of your investment portfolio.
TheMoneyMadam
No comments:
Post a Comment