Intel's Smart Move Puts Its High-Yielding Dividend on a Firmer Foundation
Shares of Intel (NASDAQ: INTC) have been under significant pressure this year. The chip giant has lost more than a third of its value on concerns that the company's ambitious expansion plan could stress its balance sheet, which might impact its ability to maintain its high-yielding dividend. That slumping stock price has pushed Intel's dividend yield over 4%, well above the S&P 500's 1.5% yield.
Intel's higher dividend yield suggests it's at higher risk of a reduction if it runs into financial trouble. However, that risk is much lower following the company's recent partnership with Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP) to help fund half the cost of two new fabrication factories. That smart move puts the tech giant's payout on a much firmer foundation.
Intel is investing heavily to expand its manufacturing capacity to stay ahead of the competition and capitalize on the growing semiconductor demand. Chip sales are on track to double by the end of the decade to top $1 trillion. That's leading the company to invest $30 billion to build two new fabrication plants in Arizona. It could also spend upwards of $100 billion each to construct new manufacturing complexes in Ohio and Germany. Intel expects the initial spending on the Ohio plant to be $20 billion and another 30 billion euros ($30 billion) in Germany.
Source Fool.com
