June 24, 2025 a 02:46 am
MCHP: Dividend Analysis - Microchip Technology Incorporated
Microchip Technology Incorporated offers investors a robust dividend profile, showcasing consistent payouts over the years with a track record of stability. The company's dividend yield stands competitively in the sector, and with a solid dividend history, it denotes reliability. However, the high payout ratio may require scrutiny, especially concerning future growth and sustainability.
Overview 📊
Microchip Technology, operating in the semiconductor sector, is distinguished by a notable commitment to returning value to shareholders through dividends.
| Metric | Value |
|---|---|
| Sector | Semiconductor |
| Dividend yield | 3.13% |
| Current dividend per share | 1.82 USD |
| Dividend history | 24 years |
| Last cut or suspension | None |
Dividend History 📉
The history of dividend payments provides insights into the company's financial health and its commitment to sharing profits with investors. A long, stable history often signifies strong financial stability.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.910 |
| 2024 | 1.811 |
| 2023 | 1.590 |
| 2022 | 1.158 |
| 2021 | 0.852 |
Dividend Growth 📈
Tracking the growth of dividends over time is crucial for anticipating future earnings potential and ensuring returns keep pace with or exceed inflation.
| Time | Growth |
|---|---|
| 3 years | 28.58% |
| 5 years | 19.87% |
The average dividend growth is 19.87% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio 🗣️
The payout ratio reveals how much of the earnings a company is distributing to shareholders and indicates if it's sustainable.
| Key figure ratio | Percentage |
|---|---|
| EPS-based | 633.16% |
| Free cash flow-based | 126.84% |
With an EPS-based payout ratio of 633.16% and FCF-based payout ratio of 126.84%, the company appears to be paying more dividends than earnings, which could be unsustainable if not supported by strong cash flow.
Cashflow & Capital Efficiency ✅
Efficient use of capital and healthy cash flow management underpin a company's ability to sustain and grow its dividend payments over time.
| Year | 2025 | 2024 | 2023 |
|---|---|---|---|
| Free Cash Flow Yield | 2.97% | 5.36% | 6.80% |
| Earnings Yield | -0.002% | 3.92% | 4.85% |
| CAPEX to Operating Cash Flow | 14.03% | 9.86% | 13.43% |
| Stock-based Compensation to Revenue | 5.26% | 2.33% | 2.02% |
| Free Cash Flow / Operating Cash Flow Ratio | 85.97% | 90.14% | 86.57% |
The company's cash flow appears strong despite the volatile earnings yield, which supports its capacity for significant dividend payouts. However, maintaining this efficiency remains crucial.
Balance Sheet & Leverage Analysis ⚖️
Analysis of leverage ratios provides insights into the company's debt strategy and financial stability, impacting its dividend policy.
| Year | 2025 | 2024 | 2023 |
|---|---|---|---|
| Debt-to-Equity | 80.05% | 90.61% | 101.33% |
| Debt-to-Assets | 36.85% | 38.00% | 40.32% |
| Debt-to-Capital | 44.46% | 47.54% | 50.33% |
| Net Debt to EBITDA | 4.35 | 1.66 | 1.55 |
| Current Ratio | 2.59 | - | - |
| Quick Ratio | 1.47 | 0.67 | 0.56 |
| Financial Leverage | 2.17 | 2.38 | 2.51 |
Microchip Technology demonstrates a significant level of financial leverage which necessitates prudent management to maintain balance sheet strength and to support ongoing dividend obligations.
Fundamental Strength & Profitability 💪
Profitability metrics and R&D investment ratios reflect the firm's ability to generate returns and reinvest in innovation.
| Year | 2025 | 2024 | 2023 |
|---|---|---|---|
| Return on Equity | -0% | 28.64% | 34.35% |
| Return on Assets | -0% | 12.01% | 13.67% |
| Margins: Net | -0.01% | 24.98% | 26.52% |
| EBIT | 8.53% | 33.49% | 36.78% |
| EBITDA | 25.57% | 45.04% | 48.73% |
| Gross | 56.07% | 65.44% | 67.52% |
| Research & Development to Revenue | 22.35% | 14.37% | 13.25% |
The declining trend in profitability margins suggests an area for attention. Nonetheless, robust R&D signifies a strong focus on future growth potential and market leadership.
Price Development 📈
Dividend Scoring System 🔍
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 2 | |
| Financial stability | 3 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 3 |
Total Score: 29/40
Rating ⭐
Microchip Technology Inc. presents itself as a dividend-paying entity with strengths in dividend continuity and yield. However, the elevated payout ratios warrant cautious optimism. Investors seeking stable income might find this stock appealing, though potential capital gains could be moderated by balancing act between leverage and profitability. Overall, it's a cautious hold pending improved financial metrics.