Intel’s Dividends at a 14-Year Low

2022 wasn’t an exciting year for the stock market. It was a challenging year to make profits, and many traders resorted to holding their stocks. Nevertheless, the worst was yet to hit Intel shareholders.

Intel’s stocks have gone downhill in the past two years, with no feasible bull run. The company posted its 2022 fourth-quarter revenue of $14 billion, down 32% year over year. However, the trigger is the $664 million fourth-quarter loss the company incurred last month.

Investors will now take home far less this quarter than last quarter. It is a significant slash as it is beyond 50%. Notwithstanding, let’s look at it closely and see how the general market fares in these uncertain times.

Investors to Go Home with 65% Less Dividends

Intel remains pessimistic as it wades through the first quarter of 2023. However, its recent announcement of a dividend cut for February 2023 shows that all is not well. The company maintained that the trimming was necessary to give it more flexibility.

There is a lot of uncertainty in the market currently. Intel hopes to use the slash as a launchpad to transform its operations for a more profitable first quarter.

Investors have enjoyed $0.36 in dividends since early 2022. Following the announcement, they will take home far less in the first quarter, at $0.125. Shareholders will receive the dividend on June 1.

The new price represents a 14-year low for the company, as it has not reached that point in a decade and a half. 2008 was the lowest throughout the 14 years, at $0.13. Many are concerned about the cut margin rather than the new price.

Even the projected revenue of $10.5 billion for the first quarter of 2023 is still below the 2022 figure. The latter came in at $14 billion, despite the considerable loss recorded.

Intel Stocks on a Roller-coaster Downhill

Investors who prefer to buy and hold still hope for a turnaround. Meanwhile, day traders who wish for the stock price to rise have had little success in the past two years. There were occasional bumps, but nothing too significant.

As of this writing, INTC’s two-year high since 2021 is $60.26 on May 4, 2021. Compare that to $30.32 recorded on February 3, 2023, and the stock has lost half of its value since 2021.

Intel’s stock went tumbling after its 2022 fourth-quarter report. It is hard to explain the massive downturn in the company’s history. Notwithstanding, it is not the only major company to slash its dividends.

AT&T cut its dividends by nearly 50% in early 2022, while Blackstone cut its own to $0.90, down from $1.27 in October.

Intel’s Dividend Slash Follows Compensation Cuts

Shortly after reporting its earnings for the fourth quarter of 2022, the company cut the pay of its top executives by a small amount. Even senior and midlevel managers lost a fair share of their compensation.

Intel’s CEO, Pat Gelsinger, got a 25% cut, roughly $312,000. Stock awards and options form the bulk of his compensation, which was $179 million in 2023.

Executive team members got a 15% cut, while senior and midlevel managers had 10% and 5% of their compensation removed, respectively. Intel hopes to recover from the 2022 fall. Nevertheless, that could take months.

The Fierce Competition

AMD remains Intel’s closest rival, occasionally beating out the titan in market cap. On the other end, Apple’s M2 chips have settled in and amassed a massive following.

Apple’s M1 chip was mind-blowing, delivering outstanding performance efficiency. The M2 chips are a step up in every direction. Also, AMD is fast catching up to the competition with its Ryzen chips.

Intel might dominate the market with a 70% share, but power users opt for MacBooks. The competition has gotten fierce and it is no longer a walk in the park for Intel.

What the Future Holds

The dividend slash and compensation cuts point to one thing: giving the company the flexibility to turn the tide. Also, the overall stock market took a hit in 2022. Day traders recorded losses as they watched prices fall.

Intel faces stiff competition from AMD and Apple. Now is not the time to have such a disturbing outlook. Nonetheless, the move is necessary if the company wants to get back to winning ways.