A spinoff should help this company remain focused on its core offering of computer chips for personal computers and data centres.
In the meantime, it’s looking to grow its ability to make chips for other firms by building advanced plants.
The stock trades at 14.9 times the company’s 2022 earnings forecast.
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INTEL CORP. (Nasdaq symbol INTC; www.intel.com) is the world’s leading maker of computer chips: its products power 90% of all personal computers and more than 80% of all data centres.
Intel has now filed the initial paperwork as part of its plan to sell shares in its Mobileye business through an initial public offering (IPO).
The company acquired Israel-based Mobileye, which makes chips for self-driving cars, for $15.7 billion in 2017.
Intel now plans to sell 41 million shares in Mobileye to the public for $18 to $20 each. The new shares will trade on the Nasdaq exchange under the “MBLY” symbol.
The company will retain control of Mobileye through class B (10 votes per share) common shares; the class A common shares carry 1 vote per share. In all, Mobileye will have an initial market cap of about $20 billion.
The company expects to receive $820 million from the offering. That’s equal to less than 1% of its current market cap (the total value of all outstanding shares) of $123.4 billion.
Dividend Stocks: Expansion plans include plants in two U.S. states
Intel will use the cash from the Mobileye IPO to fund its plan to increase its ability to make chips for other companies.
Under that strategy, the company plans to build two chipmaking plants in Ohio at a cost of $20 billion. These facilities will make its most advanced chips when they begin operating in 2025. Subsidies and tax credits from the passage of the new CHIPS and Science Act in the U.S. Congress will help offset some of those costs.
The company plans to build two new chipmaking facilities in Arizona. Those new plants should begin operating in 2023.
Intel has now signed a new deal with Brookfield Infrastructure Corp. (New York symbol BIPC) that will help cover the $30 billion cost of these new plants.
Under this agreement, Brookfield will pay 49% of the cost, with Intel paying the remaining 51%, or $15.3 billion. That’s equal to 12% of Intel’s $123.4 billion market cap.
In exchange for this funding, Brookfield will receive 49% of the future revenue from these new plants.
This deal should help Intel attract other partners to fund its new plants in Ohio.
With the March 2022 payment, Intel raised your quarterly dividend by 5.0%. Investors now receive $0.365 a share instead of $0.3475. The new annual rate of $1.46 yields 5.0%.
Intel has paid dividends continuously since 1992. That payment has risen an average 7.0% annually over the last 5 years. The company’s TSI Dividend Sustainability Rating is Above Average.
Recommendation in Dividend Advisor: Intel Corp. is a buy.