By Sam Boughedda
Speculation on Wall Street is that Intel (NASDAQ:INTC) will have to cut its dividend, according to a report by Bloomberg on Wednesday.
In a "Tech Watch" piece, Bloomberg said the tech giant's tumbling shares have resulted in its dividend yield being the highest among large technology companies. With capital spending demands jumping and Intel bleeding cash, the payouts "won't last," they said.
At the current rate, the chipmaker's dividend is forecast to cost over $6 billion in 2023, the report states, adding that analysts at Morgan Stanley and Credit Suisse are concerned.
They believe Intel will be pushed to prioritize significant spending to recover its manufacturing leadership and cut shareholder payouts, which would further weigh on its tumbling stock.
Intel's dividend yield, at over 5%, is well above its chipmaker peers. The company has been steadily raising payouts over the years.
However, the headwinds are mounting, with its dominance in the industry now significantly challenged.
Intel posted extremely weak Q4 results, missing top and bottom line expectations as well as guidance estimates. Intel also did not provide a full-year forecast due to "the uncertainty in the current environment."
Intel is well aware of the importance of its dividend payouts, but when asked about the dividend on its most recent earnings call, Chief Financial Officer Dave Zinsner didn't dismiss the potential of a cut.