Yahoo Finance Microchip Technology Inc's Dividend Analysis
Exploring the Sustainability and Growth of Microchip Technology Inc's Dividends
Microchip Technology Inc (NASDAQ:MCHP) recently announced a dividend of $0.45 per share, payable on June 5, 2024, with the ex-dividend date set for May 21, 2024. 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?
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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, distributing dividends quarterly. The company has increased its dividend each year since 2003, earning it the status of a dividend achiever, a title given to companies that have consistently raised their dividends for at least 21 consecutive years.
Breaking Down Microchip Technology Inc's Dividend Yield and Growth
As of today, Microchip Technology Inc has a 12-month trailing dividend yield of 1.78% and a 12-month forward dividend yield of 1.92%, indicating an expected increase in dividend payments over the next year. Over the past three years, the annual dividend growth rate was 19.90%. This rate decreased to 10.40% over a five-year period, and over the past decade, the annual dividends per share growth rate stands at 3.80%. The 5-year yield on cost of Microchip Technology Inc stock as of today is approximately 2.92%.
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 of 0.44 as of March 31, 2024, suggests that the company retains a significant portion of its earnings, which supports future growth and stability. Microchip Technology Inc's profitability rank is 10 out of 10, indicating excellent profitability prospects. The company has reported positive net income for each year over the past decade.
Growth Metrics: The Future Outlook
Microchip Technology Inc's growth rank of 10 out of 10 suggests that the company's growth trajectory is excellent relative to its competitors. The company's revenue per share and 3-year revenue growth rate of 13.70% per year on average outperforms approximately 66.56% of global competitors. Additionally, the 3-year EPS growth rate of 50.40% per year and the 5-year EBITDA growth rate of 45.80% also indicate strong growth potential.
Conclusion: A Robust Dividend Profile
Microchip Technology Inc's consistent dividend growth, prudent payout ratios, and strong profitability and growth metrics paint a promising picture for current and prospective investors. These factors not only ensure the sustainability of dividends but also suggest potential for future growth in payouts. For investors seeking dividend growth stocks, Microchip Technology Inc represents a compelling option. GuruFocus Premium users can further explore 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.
