July 03, 2025 a 03:31 pm
MCHP: Dividend Analysis - Microchip Technology Incorporated
Microchip Technology Incorporated appears to have a solid dividend profile with a noteworthy history of dividend payments for 24 years. Although there are concerns regarding its payout ratios, the company's steady growth in dividend payments positions it as a potentially attractive option for dividend-seeking investors. Investors should carefully examine the payout sustainability given the high EPS-based payout ratio.
📊 Overview
Microchip Technology Incorporated operates within the semiconductor sector, offering a current dividend yield of 3.13%. The company's current dividend per share stands at $1.82, and it boasts a long-standing history of dividends lasting 24 years, with no recent cuts or suspensions.
| 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 Microchip's dividends is indicative of management's commitment to returning value to shareholders. Consistent dividend disbursement over the past decades reflects positively on the company’s financial resilience.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.910 |
| 2024 | 1.811 |
| 2023 | 1.590 |
| 2022 | 1.158 |
| 2021 | 0.852 |
📈 Dividend Growth
Analyzing the dividend growth over the past few years provides insight into the company's potential capability to enhance shareholder returns. Notably, the dividend growth rate over the last three years is approximately 28.58%, while the five-year rate stands at 19.87%.
| 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 offers an indication of how safe the dividend is. Microchip's high payout ratio based on EPS (633.16%) versus its free cash flow-based ratio (126.84%) raises concerns regarding sustainability if earnings fluctuate.
| Key figure | Ratio |
|---|---|
| EPS-based | 633.16 % |
| Free cash flow-based | 126.84 % |
The high EPS-based payout ratio of 633.16% suggests potential difficulties in maintaining dividend payouts solely on earnings.
📊 Cashflow & Capital Efficiency
Cash flow metrics are critical for assessing the firm's ability to cover its dividends from actual cash generated. An FCF yield of 1.95% and earnings yield of 0.39% reflect the current capital efficiency.
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Free Cash Flow Yield | 6.80% | 5.36% | 2.97% |
| Earnings Yield | 4.85% | 3.92% | -0.19% |
| CAPEX to Operating Cash Flow | 13.43% | 9.86% | 14.03% |
| Stock-based Compensation to Revenue | 2.02% | 2.32% | 4.10% |
| Free Cash Flow / Operating Cash Flow Ratio | 86.57% | 90.14% | 85.97% |
Microchip Technology's cash flow profile exhibits reasonable stability, although high stock-based compensation may dilute shareholder value.
📊 Balance Sheet & Leverage Analysis
Balance sheet strength is essential to withstand economic downturns. The debt-to-equity ratio of 0.80 indicates a balanced leverage with substantial debt capacity.
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Debt-to-Equity | 1.01 | 0.91 | 0.80 |
| Debt-to-Assets | 40.32% | 38.00% | 36.85% |
| Debt-to-Capital | 50.33% | 47.54% | 44.46% |
| Net Debt to EBITDA | 1.55 | 1.66 | 4.35 |
| Current Ratio | 0.98 | 1.20 | 2.59 |
| Quick Ratio | 0.56 | 0.67 | 1.47 |
| Financial Leverage | 2.51 | 2.38 | 2.17 |
Microchip’s reduced leverage over recent years suggests prudent financial management and enhances liquidity.
📊 Fundamental Strength & Profitability
Profitability ratios such as return on equity (2.39%) and net profit margins (24.98%) are notable metrics, offering insights into effective management and operational efficiency.
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Return on Equity | 34.35% | 28.64% | -0.01% |
| Return on Assets | 13.67% | 12.01% | -0.00% |
| Net Margin | 26.52% | 24.98% | -0.01% |
| EBIT Margin | 36.78% | 33.49% | 8.53% |
| EBITDA Margin | 48.73% | 45.04% | 25.57% |
| Gross Margin | 67.52% | 65.44% | 56.07% |
| Research & Development to Revenue | 13.25% | 14.37% | 22.35% |
Microchip’s profitability maintains robust despite fluctuating market conditions, reflective of strong operational management.
📊 Price Development
📊 Dividend Scoring System
| Category | Description | Score |
|---|---|---|
| Dividend yield | Competitive yield relative to the sector average. | |
| Dividend Stability | 24 consecutive years of dividends provide stability. | |
| Dividend growth | Moderate but steady growth over the past 5 years. | |
| Payout ratio | High payout ratios pose a risk to sustainability. | |
| Financial stability | Strong balance sheet supports dividend payments. | |
| Dividend continuity | No recent cuts or suspensions enhance reliability. | |
| Cashflow Coverage | Available free cash flow adequately covers dividends. | |
| Balance Sheet Quality | Efficient debt management augurs financial health. |
Overall Score: 34 out of 40
🗣️ Rating
Microchip Technology Incorporated presents as a robust dividend stock with strong financial health, though high payout ratios require monitoring. Investors seeking dividends should consider this stock as a stable income source, albeit keeping an eye on its future earnings sustainability.