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How Intel Is Compensating Investors through Share Buybacks

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Dec. 3 2018, Updated 1:50 p.m. ET

Intel’s capital allocation policy

Intel (INTC) has been rewarding its shareholders through share buybacks and dividends, as the chipmaker focuses on first investing back in the company and then making investments and acquisitions to strengthen the company. The company returned approximately $177 billion to stockholders through dividends and stock repurchases between 1990 and the third quarter of 2018. On a year-to-date basis as of September 29, the company returned $12.6 billion to shareholders through buybacks and dividends.

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Balance sheet

Year-to-date, the company has free cash flows of $11.2 billion. In the third quarter of 2018, the company’s cash flow from operations was $8.8 billion. For fiscal 2018, the company anticipates free cash flow of $15.5 billion.

On November 15, Intel’s board approved a $15 billion increase in the share buyback program. During the third quarter, the company repurchased nearly 50 million shares for approximately $2.7 billion. The company has $4.7 billion left under its current repurchase plan. The company paid dividends of $1.4 billion in the quarter.

Intel’s peer Qualcomm (QCOM) recently announced an accelerated share buyback program of its common stock worth $16 billion as part of its $30 billion stock repurchase program, the majority of which is expected to close by the end of fiscal 2019.

Dividend yield

Intel’s annualized dividend of $1.20 per share represents a dividend payout of 28.8% and a yield of 2.52% as of November 29. Peers Qualcomm, Broadcom (AVGO), and NVIDIA (NVDA) have dividend yields of 4.27%, 2.97%, and 0.41%, respectively.

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