Microchip Technology Inc's Dividend Analysis
Assessing the Dividend Performance and Sustainability of Microchip Technology Inc (NASDAQ:MCHP)
Microchip Technology Inc(NASDAQ:MCHP) recently announced a dividend of $0.44 per share, payable on 2023-12-06, with the ex-dividend date set for 2023-11-21. 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 Incs dividend performance and assess its sustainability.
What Does Microchip Technology Inc Do?
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Microchip Technology became an independent company in 1989 when it was spun off from General Instrument. More than half of revenue comes from 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. Dividends are currently distributed on a quarterly basis.
Microchip Technology Inc has increased its dividend each year since 2003. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 20 years. Below is a chart showing annual Dividends Per Share for tracking 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 1.77% and a 12-month forward dividend yield of 1.90%. This suggests an expectation 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%. Extended to a five-year horizon, this rate decreased to 10.40% per year. And over the past decade, Microchip Technology Inc's annual dividends per share growth rate stands at 3.80%.
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 2.90%.
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, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Microchip Technology Inc's dividend payout ratio is 0.32.
Microchip Technology Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Microchip Technology Inc's profitability 10 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Microchip Technology Inc's growth rank of 10 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Microchip Technology Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Microchip Technology Inc's revenue has increased by approximately 13.70% per year on average, a rate that outperforms approximately 54.36% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Microchip Technology Inc's earnings increased by approximately 50.40% per year on average, a rate that outperforms approximately 74.61% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 45.80%, which outperforms approximately 84.97% of global competitors.
Engaging Conclusion
With a consistent dividend payment record, a promising dividend growth rate, a prudent payout ratio, and solid profitability and growth metrics, Microchip Technology Inc stands out as a potentially attractive option for value investors seeking stable dividend income. As the company continues to innovate and expand within the semiconductor industry, its financial health and commitment to shareholder returns may provide a compelling narrative for long-term investment. Will Microchip Technology Inc continue to deliver shareholder value and maintain its dividend achiever status in the years to come?
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.
