Intel Raises Dividends and Appoints New Board Members
Intel’s recent press release stated that the board had declared a quarterly dividend of $0.2725 per share, $1.09 annually. This comes a month barely after the chip giant announced that it had purchased Mobileye for a stunning $15 billion. The payout is just shy of a 5% increase, but it has put smiles on investors’ faces.
The five-cent annual increase was in line with what the company’s chief financing officer had cited at the Investor meeting in February. The annual increase is believed by some to be an indicator that the board did not believe that the purchase of Mobileye would change the dividend policy moving forward. Most importantly, the dividend raise puts the annual yield back at 3%. The raise sees Intel investors earn a 3.09% per year based on the current quarterly rate, which is currently almost 10 points above the 30-Year Treasury rate.
Mobileye acquisition apparently had no impact on the increased payout decision. The shares are still half a percent down, but that is likely to change for the better as people get to digest the changes.
The 7.1% quarterly dividend increase allows the technology company to boost its payout to shareholders for the third time in less than two years. The company will now pay shareholders 22.5 cents a share a quarter, an increase of 1.5 cents from the previously paid 21 cents.
The increase will cost the company an estimated additional $78 million a quarter. “This latest dividend increase is one more example of our commitment to return cash to our stockholders as we continue to generate strong cash flow. The cash flow is driven by the global growth of computing,” remarked Intel Chief Executive Paul Otellini.
As mentioned earlier in the article, the new payout puts the company’s annual dividend yield at 3.22%, above the likes of fellow tech and chip competitors such as International Business Machines Corp. (IBM) and Microsoft Corp. (MSFT). Intel chips run more than 80% of the world’s PCs. The company posted record results in 2011 despite worries about demand. Shares were recently off two cents at $27.88 shortly after the market open in New York.
Not only did Intel announce an increase in dividends, but also the election of two new members to the board of directors, Greg Smith and Omar Ishrak. “We are very pleased to welcome two new, independent directors with the depth of leadership experience at innovative, global companies that both Mr. Ishrak and Mr. Smith bring,” commented Intel Chairman Andy Bryant. He further adds, “We look forward to their valuable contributions as Intel continues to transform itself for growth in emerging, adjacent market segments.”
Mr. Smith is the chief financial officer and executive vice president of corporate development and strategy at Boeing, whereas Mr. Ishrak, 61, is the chairman and chief executive officer of Medtronic, a global giant in medical technology.