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Why NASDAQ:MCHP qualifies as a good dividend investing stock.

By Mill Chart

Last update: Feb 26, 2024

Take a closer look at MICROCHIP TECHNOLOGY INC (NASDAQ:MCHP), a stock of interest to dividend investors uncovered by our stock screener. NASDAQ:MCHP excels in fundamentals and provides a decent dividend, all while maintaining a reasonable valuation. Let's break it down further.

Looking at the Dividend

ChartMill employs its own Dividend Rating system for all stocks. This score, on a scale of 0 to 10, is determined by evaluating different dividend factors, such as yield, historical performance, dividend growth, and sustainability. NASDAQ:MCHP has been assigned a 7 for dividend:

  • Compared to an average industry Dividend Yield of 2.12, MCHP pays a better dividend. On top of this MCHP pays more dividend than 92.38% of the companies listed in the same industry.
  • On average, the dividend of MCHP grows each year by 11.69%, which is quite nice.
  • MCHP has been paying a dividend for at least 10 years, so it has a reliable track record.
  • MCHP has not decreased their dividend for at least 10 years, which is a reliable track record.
  • 36.71% of the earnings are spent on dividend by MCHP. This is a low number and sustainable payout ratio.

Deciphering NASDAQ:MCHP's Health Rating

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:MCHP has achieved a 5 out of 10:

  • MCHP has an Altman-Z score of 4.73. This indicates that MCHP is financially healthy and has little risk of bankruptcy at the moment.
  • The Debt to FCF ratio of MCHP is 2.02, which is a good value as it means it would take MCHP, 2.02 years of fcf income to pay off all of its debts.
  • MCHP has a Debt to FCF ratio of 2.02. This is in the better half of the industry: MCHP outperforms 67.62% of its industry peers.
  • Even though the debt/equity ratio score it not favorable for MCHP, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

Understanding NASDAQ:MCHP's Profitability

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:MCHP has earned a 9 out of 10:

  • MCHP has a Return On Assets of 14.60%. This is amongst the best in the industry. MCHP outperforms 81.90% of its industry peers.
  • The Return On Equity of MCHP (33.28%) is better than 90.48% of its industry peers.
  • Looking at the Return On Invested Capital, with a value of 20.20%, MCHP belongs to the top of the industry, outperforming 89.52% of the companies in the same industry.
  • The last Return On Invested Capital (20.20%) for MCHP is above the 3 year average (11.80%), which is a sign of increasing profitability.
  • MCHP has a Profit Margin of 27.59%. This is amongst the best in the industry. MCHP outperforms 88.57% of its industry peers.
  • MCHP's Profit Margin has improved in the last couple of years.
  • Looking at the Operating Margin, with a value of 37.14%, MCHP belongs to the top of the industry, outperforming 92.38% of the companies in the same industry.
  • MCHP's Operating Margin has improved in the last couple of years.
  • With an excellent Gross Margin value of 67.03%, MCHP belongs to the best of the industry, outperforming 88.57% of the companies in the same industry.
  • MCHP's Gross Margin has improved in the last couple of years.

More Best Dividend stocks can be found in our Best Dividend screener.

For an up to date full fundamental analysis you can check the fundamental report of MCHP

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.

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MICROCHIP TECHNOLOGY INC

NASDAQ:MCHP (5/24/2024, 7:00:00 PM)

After market: 98.19 -0.04 (-0.04%)

98.23

+0.09 (+0.09%)

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