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Strategies & Market Trends : Dividend investing for retirement
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To: Chris Forte who wrote (3796)2/15/2010 12:08:40 PM
From: Steve Felix  Read Replies (2) of 34328
 
You asked for pro's but I'll chime in anyway. :)

The only thing I don't like about INTC is that it is a highly cyclical business. At times this could play in your favor.

They (and ADP also) are sitting on a lot of cash, something others look at as a minus, but I see as covering the dividend in case of a hiccup or two.

Here are the IFs:

If analysts are right, for 2010 INTC will earn $1.67, ADP $2.34.

Last raise for ADP was .01 per quarter or 3.03%.

A similar raise of .01 per quarter for ADP will give .35 per quarter 1.40 per year. 2.94% increase. $1.40 divided by $2.34 earnings = 59.8% payout ratio going forward.

Last raise for INTC was .018 per quarter or 12.8%.

A similar raise or .018 per quarter for INTC will give .176 per quarter .704 per year. 11.3% increase. $.704 divided by $1.67 earnings = 42% payout ratio going forward.

If both stocks hit S+P evaluations on 2010 earnings ADP will be up 5.9%, INTC 22%.

People will look at different things:

Trailing PE  ADP  15.08  INTC  26.40
Forward PE  ADP  16.04  INTC  11.41
PEG Ratio  ADP  1.59  INTC  1.06 
Price to sales  ADP  2.36  INTC  3.15 
Price to book  ADP  3.57  INTC  2.66


Given a choice at this moment I would go with INTC, knowing I would have to keep more of an eye on it than the much more level earning ADP. I'm sure others see it differently.
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