Intel (INTC) 52-Week High

[TomK]

I figured it was time to start a new thread about Intel instead of the one that has been running a while (Intel -- Bargain or Doomed?). All the discussion about INTC for the past year it seems has been doom and gloom, including here on DGF. But in the face of it all, Intel's share price has been quietly and steadily increasing, and is today setting a new 52-week high over $26 (intraday, anyway). So perhaps Intel is neither a bargain nor doomed? Is the turnaround finally underway for real?

[rnsmth]

Since I am focused on dividend growth, INTC became unsuitable for my portfolio after it passed the 5 quarter mark with no dividend increase. For folks with a different focus it may be a fine holding. One of the few rules I have is that if a company does not raise its dividend for over a year, it gets sold unless management provides very good reasoning behind that decision and makes a commitment to resuming dividend growth in the near future. Intel did not do that. Bye-bye INTC

[fiveoh]

I sold off the majority of my Intel for the same reason. Also to reduce my exposure to tech. I have no idea why Intel has gained so much lately. The fundamentals haven't gotten any better.

[mjs_28s]

I hope it closes just under $26 on options expiration Jan 17. I would love to sell another round of calls on it, but if it goes it goes.

[TomK]

So no theories about the rise? Is it just moving along with the market generally?

[Dividend Watcher]

TomK, my theories are only guesses. We little guys really don't move large market cap stocks, like INTC, very much.

My guesses are 1.) that INTC has released a flurry of new products lately, 2.) some are looking forward to the results from the large R&D expenditures, 3.) a new CEO that seems to be trying to change the corporate culture to be more responsive to the marketplace, and 4.) that the 3.5% yield is still pretty good for income.

I trimmed a little the last trip to $26 just because I had a purchase in mind and needed a little extra capital.

I'm holding quite a bit yet for several reasons:

1.) INTC does have some very creative engineering. I think they'll come up with competitive products to ramp up sales. The marketing department is no slouch either.

2.) INTC is a fierce competitor. I see it all the time in my business and can't imagine the pressure they put on OEMs once they have a product they can brag about.

3.) I can wait a little longer for a dividend boost. UTX has been on a 5 or 6 quarter dividend raise schedule for years and they don't seem to be punished for it.

4.) There's still a big corporate refresh cycle that needs to be addressed. A lot of small and large businesses are still running XP on older systems. With the end of support for XP only months away, some will have to address that. Can you imagine the fiasco if another breach such as TGT's latest faux pas was caused by someone running an unpatched, and compromised, XP machine?

5.) As I said, 3.5% yield is still a nice income stream. To approximate that income somewhere else will either require me to buy something I'm already exposed to, go to a riskier company or into a field I'm not sure how to value and analyze such as BDCs or MLPs. I'll be patient a little longer.

If it cracks the $26 barrier, I may sell a covered call to capture the premium and if it gets called away I won't have a problem with it. Then to find another place to invest it.

Time will tell.

[Kerim]

I too was disappointed that INTC failed to raise the dividend when we all expected them too, and in the face of the many concerns about its business, I pared back my holdings some (from a whole lot to just a lot).

But I wanted to point out that, at least the way some of us track it, if they raise the dividend any time in 2014, then their streak of annual dividend increase will be alive and well. If you go by calendar year (which I do), they paid .87 per share in 2012 and .90 per share in 2013. If any of the four dividends this year is higher, the 2014 payout will exceed .90.

There are some of companies that raise their dividend in the middle of every other year (only once every two years), and are able to keep a streak of annual raises going that way, from a calendar perspective, anyway.

Just thought I'd mention it.

[ronn38]

I'm still bullish on Intel, but am likewise disappointed in the static dividend. As has been stated, this is one of the 800lbs gorilla's in the tech room. And though they have surprisingly been slow to dance at the smartphone prom; when you need real computing power...

I got Intel at a nice price and am willing to dance with the gorrila I came with for a while longer;-)

And, yes- right now I think its just riding the market up.

Ronn

[TomK]

Been a while since we discussed INTC. But I figured a day on which it is up over 7.5% would be as good a time as any to bring it back up. What a difference a year, makes, huh?

We were talking about 52-week highs at $26. Now we're looking at $34+.

You guys think the ship is righted, or is this out of hand?

[Dividend Watcher]

(07-16-2014, 01:06 PM)TomK Wrote: Been a while since we discussed INTC. But I figured a day on which it is up over 7.5% would be as good a time as any to bring it back up. What a difference a year, makes, huh?

We were talking about 52-week highs at $26. Now we're looking at $34+.

You guys think the ship is righted, or is this out of hand?

Well, Tom, I never thought the ship was upside down.

In my opinion, INTC was undergoing another of their capital-intensive R&D phase to address some challenges and enter new markets. IIRC, they did something similar when the Pentium line reached its thermal dissipation limits and they came up with the "core" concept and even further back when they still were a major player in the DRAM market. Just the nature of their industry.

Unfortunately, the perception by everyone was that INTC was dead money and a dying company. I never believed the story (see my comments above). When Krzanich took over as CEO, I thought that added a breath of fresh air to the corporate bureaucracy and augured well for a more focussed path going forward.

Now for us DGI investor/owners, it's been tough with no dividend increases. I've held on in both my wife's and my portfolios other than trimming to diversify our portfolios further yet we still retained large positions and were reinvesting. Yesterday's earnings announcement was good news and I expect we will be seeing some good earnings reports for the next few quarters although not necessarily as big a jump as this one.

To me, it's fairly to a little overvalued here at $34. I trimmed some of wife's holdings because we're still working on diversifying her portfolio and it became her 2nd largest holding by quite a distance. I have my eyes on a couple things -- namely ESV or JNJ with the downturn in JNJ's price of the last few days. I'm still thinking of what I'm going to do here in my portfolio. I'd like to take a little off the table and add something else but haven't decided what yet -- REIT or utility maybe -- to boost the income stream. At this price, INTC's yield is under 3% and with less than 10 years to go, I need to watch the income stream even closer.

I was disappointed that they announced adding $20 billion to the buyback program but no dividend increase. We may see that as we get closer to the next quarter's payout.

Patience certainly helped.

[Kerim]

I don't regret paring back my position last year. My INTC position was pretty large -- over 10 percent, I think. So with the languishing dividend, I was glad to cut the position back to about 6 percent of my portfolio. A sizable reduction, but still a pretty major position for me. Would have done better to hold, I guess. Another reminder that holding long term means riding out down / sideways periods that can last for years.

Now let's see if they can keep the dividend streak alive with even a modest increase this year!

[ChadR]

Didn't sell INTC. Though it's only 2% of my portfolio. Hasn't cut dividends yet so it didn't meet one of my criteria for selling. Kermin you're right. Holding long term means riding out periods like this. Glad I had the fortitude to do it with this one. Though it might have been a lot harder if it was 10% of my portfolio instead of just 2%.