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Friday, April 8, 2016

Recent Transfer: Intel Corporation

Intel Corporation (NASDAQ:INTC) is an American multinational semiconductor chip maker corporation with headquarters in Santa Clara, California. Intel makes motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphic chips, embedded processors and other devices related to communications and computing. It is the world's largest and highest valued semiconductor chip maker, based on revenue.

Before freezing its dividend in 2014, INTC had a streak of 9 consecutive years of dividend increases. The company resumed increasing its dividend in 2015.

Regular readers will be aware of my goal to consolidate several portfolios containing dividend paying stocks. The reason I'm doing this is so I can manage these stocks using the strategies I've developed at DivGro.

I completed the transfer of stocks from my Scottrade portfolio and from my traditional IRA. Today, I'm transferring the first stock from my Roth IRA. Here's a summary of the IRA stocks transferred so far:
I already own 120 shares of INTC. With this transfer, I'm adding another 100 shares for a total of 220 shares. Here is a chart showing my buy prices:

The 2 buys I'm transferring today are connected with red dashed lines. The other buy, indicated with an orange icon, represents the 120 shares of INTC already in my DivGro portfolio.

2012-12-04  Bought: 38.34655 shares of INTC at $19.93 per share:$764.13
2013-03-01Dividend on 38.34655 shares at 22.5¢ per share:$8.63
2013-06-03Dividend on 38.34655 shares at 22.5¢ per share:$8.63
2013-09-03Dividend on 38.34655 shares at 22.5¢ per share:$8.63
2013-12-02Dividend on 38.34655 shares at 22.5¢ per share:$8.63
2014-03-03Dividend on 38.34655 shares at 22.5¢ per share:$8.63
2014-06-02Dividend on 38.34655 shares at 22.5¢ per share:$8.63
2014-09-02Dividend on 38.34655 shares at 22.5¢ per share:$8.63
2014-12-01Dividend on 38.34655 shares at 22.5¢ per share:$8.63
2015-03-02Dividend on 38.34655 shares at 24.0¢ per share:$9.20
2015-06-01Dividend on 38.34655 shares at 24.0¢ per share:$9.20
2015-09-01Dividend on 38.34655 shares at 24.0¢ per share:$9.20
2015-12-01Dividend on 38.34655 shares at 24.0¢ per share:$9.20
2016-02-17Bought: 61.65345 shares of INTC at $29.49 per share:$1,818.15
2016-03-01Dividend on 38.34655 shares at 26.0¢ per share:$9.97
 Total Capital Invested $2,582.28

Total Dividends Received:$115.81

With this transfer, DivGro's projected annual dividend income (PADI) increases by $104.00 and I'm adding $115.81 in past dividends to DivGro's total dividend income.

Ratings and Fair Value Estimates for INTC

Following is a table containing updated ratings of INTC from various sources:
 Morningstar Ratings (***--) Credit Rating: AA 
 Dividend.com's DARS Rating  3.4/5 (Neutral)
 TheStreet Ratings Rating  Buy [B]
 The Motley Fool's CAPS Rating  (****-)
 Thomson Reuters StockReport+ (8/10) Positive 
 S&P Capital IQ Stock Report Buy (****-) Quality Ranking: B+ 
 Zacks Rank and VGM Style Score 3-Hold (VGM:A)
 Tipranks Analysts Consensus Rating  Moderate Buy
  †combined Value/Growth/Momentum score

Morningstar's fair value estimate of INTC is $31.00, whereas S&P Capital IQ calculates a fair value of $37.40. According to Tipranks, based on 32 ranked analysts offering 12-month price targets for INTC, the average price target is $36.67. Finally, finbox.io has a fair value estimate of $37.81.

Included here is an embedded tool allowing you to adjust parameters in a Comparable Company Analysis based on EBITDA multiples and see the effect on fair value, courtesy of finbox.io.

The average of these valuations is $35.72, which means that INTC is trading at a discount of about 10% to fair value.


Here are some additional reasons why I like INTC:
  1. Morningstar assigns INTC a AA credit rating and a wide economic moat, stemming from its superior cost advantages as realized in the design and manufacturing of cutting-edge microprocessors.
  2. The company holds about 80% of the microprocessor market share and is the unquestioned leader with regards to processor performance. 
  3. INTC's leading position in PCs, strength in servers, growing position in software and Internet of Things segments and headway in process technology are all positive indicators for future growth.
  4. A number of investment brokers recently updated their price targets for INTC, with 12 strong buy, 14 buy, 14 neutral, and 3 sell recommendations.
  5. The data center group has directly benefited from the proliferation of mobile devices. Server processor sales will increase in the near future. Also, cloud computing, virtualization, enterprise upgrades and new products should all drive sales this year.
Do you own shares of INTC? Would you buy shares at the current price? Please share your ideas about INTC in the comments section below.

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