Microchip Technology Inc's Dividend Analysis
Assessing the Sustainability of Microchip Technology Inc's Upcoming Dividend
Microchip Technology Inc (NASDAQ:MCHP) recently announced a dividend of $0.45 per share, payable on 2024-03-08, with the ex-dividend date set for 2024-02-22. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Microchip Technology Inc's dividend performance and assess its sustainability.
What Does Microchip Technology Inc Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Microchip Technology became an independent company in 1989 when it was spun off from General Instrument. More than half of its revenue comes from microcontrollers (MCUs), which are used in a wide array of electronic devices from remote controls to garage door openers to power windows in autos. The company's strength lies in lower-end 8-bit MCUs that are suitable for a wider range of less technologically advanced devices, but the firm has expanded its presence in higher-end MCUs and analog chips as well.
A Glimpse at Microchip Technology Inc's Dividend History
Microchip Technology Inc has maintained a consistent dividend payment record since 2002, with dividends currently distributed on a quarterly basis. Moreover, Microchip Technology Inc has increased its dividend each year since 2003, earning it the title of a dividend achieveran accolade reserved for companies that have raised their dividend annually for at least the past 21 years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Microchip Technology Inc's Dividend Yield and Growth
As of today, Microchip Technology Inc currently has a 12-month trailing dividend yield of 1.96% and a 12-month forward forward dividend yield of 2.07%, indicating expectations of increased dividend payments over the next 12 months. Over the past three years, Microchip Technology Inc's annual dividend growth rate was 19.90%, which decreased to 10.40% per year over a five-year span, and stands at 3.80% over the past decade.
Based on Microchip Technology Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Microchip Technology Inc stock as of today is approximately 3.21%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, which ensures funds are available for future growth and unexpected downturns. As of 2023-12-31, Microchip Technology Inc's dividend payout ratio is 0.33.
Microchip Technology Inc's profitability rank of 10 out of 10 as of 2023-12-31 indicates good profitability prospects. The company has also reported positive net income each year over the past decade, further solidifying its strong profitability.
Growth Metrics: The Future Outlook
A company must have robust growth metrics to ensure the sustainability of dividends. Microchip Technology Inc's growth rank of 10 out of 10 suggests a good growth trajectory relative to its competitors. Its revenue per share and 3-year revenue growth rate indicates a strong revenue model, with an average annual increase of 13.70%, outperforming approximately 54.68% of global competitors.
The company's 3-year EPS growth rate shows its capability to grow earnings, critical for sustaining dividends, with an average annual increase of 50.40%, outperforming approximately 75.32% of global competitors. Additionally, the 5-year EBITDA growth rate of 45.80% outperforms approximately 85.31% of global competitors.
Engaging Conclusion
In conclusion, Microchip Technology Inc's consistent dividend payments, impressive growth rate, prudent payout ratio, strong profitability, and robust growth metrics paint a picture of a company with a strong commitment to returning value to its shareholders. The data suggests that Microchip Technology Inc is well-positioned to maintain, if not grow, its dividends in the foreseeable future. Investors interested in high-dividend yield stocks may find Microchip Technology Inc an attractive option to consider. Will Microchip Technology Inc continue its streak of dividend increases, and how will its strategic initiatives influence future payouts? This is a key question for value investors as they weigh their investment decisions.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
