Intel Corporation (INTC): Value-Trap or Income-Play?

Income investment
On the other hand, Intel still does lead in market share. And while ARM, its larget rival in mobile chips, spent $74 million last quarter in research and development, Intel Corporation (NASDAQ:INTC) spent $2.5 billion. There’s no guarantee that this expense will lead to conquering a significant share of the future market, but substantial continuous investment in technology is a good sign.

Additionally, all the aforementioned potential obstacles have been priced into Intel’s stock. The company trades at a P/E of 11.4, very close to the low level it reached during the recession. Even with a high 4% dividend yield, the company’s payout ratio is still a very sustainable 44%. And, that dividend has grown 60% over the past five years, showing the company happily returns value to shareholders.

In the longer term, Intel Corporation (NASDAQ:INTC) has a growing market in data centers, which will continue to be the hidden backbone of any mobile-focused world. While its data center segment contributed only 20% of revenue in the last quarter, it grew 7.5% over the previous year. This segment also has a healthy 41% gross margin, besting the PC client group’s 31%.

Dead, or dependable?
The trends at Intel are worrying, but if you believe in the company’s ability to pivot, it offers a stable income investment at a cheap price. If you do bite at its 4% yield, just make sure to keep an eye out for any deteriorating trends.

The article Intel Stock: Value Trap or Income Investment? originally appeared on Fool.com.

Fool contributor Dan Newman owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and QUALCOMM, Inc. (NASDAQ:QCOM).

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