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Portfolio Update: New Addition (INTC; September 24, 2012)

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Well, I guess it was only a matter of time before I could no longer resist the temptation… I finally did it. I logged in this morning and found that the stock market was down again (it’s always negative on Monday’s, right?). Previously, I had targeted a 4.0% yield as a potential point of entry for Intel. As my luck turned out, INTC was sitting just around 4.0% when I decided to go ahead and pull the trigger.

I purchased 63 shares at $22.64/share. This is the second tech stock I’ve added to the portfolio, alongside Apple. In general, my preference is to shy away from technology stocks, as opposed to embracing them. Although I do work in high-tech, I have seen too many people burned by them (RIMM anyone?), so that my gut instinct is usually urging me to steer clear.

However, Intel is a slightly different story. This giant blue-chip has been around for decades, and has the technology, talent, r&d, and manufacturing to stay viable, and lead for years to come. Intel dominates the server, notebook, ultrabook, and PC businesses – their processors are ubiquitous in this application space. And although they have been late to the dance when it comes to winning sockets for mobile processors, it appears that management is making a strong commitment to tap into this lucrative market.

Here is a Forbes article from earlier this year, addressing Intel’s planned foray into mobile devices:

http://www.forbes.com/sites/briancaulfield/2012/05/10/intel-to-insure-apple-cant-ignore-its-mobile-chips-for-ipad-iphone-ceo-says/

Long term, I think it is difficult to bet against Intel. So, when the share price is down on the short term, and the dividend yield is 4.0%, I think it makes a very solid play.

Here are the technicals, assuming an investment start date of January 1, 2005. You can see that the stock price has been mostly flat in the past few years (much like MSFT, CSCO). The growing dividend helps, and has returned 20% of the initial investment in 7 years.

 

{ 10 comments… add one }
  • Dividend Growth MachineNo Gravatar September 24, 2012, 7:43 pm

    Thanks for your comment on my blog. It’s funny that we both made nearly identical purchases today. Hopefully INTC serves us well!

    • FI FighterNo Gravatar September 24, 2012, 9:45 pm

      DGM,

      Good stuff! Just like with NSC last week, hmm, I hope we are on to something! INTC is very attractively priced right now, and I would imagine it would see a lot of resistance at 4% yield from dividend investors. Should the shares drop even further, like you, I’ll probably add more.

      Best wishes.

  • Dividend MantraNo Gravatar September 25, 2012, 6:30 pm

    Great purchase. INTC is becoming more and more attractive by the day. It’s amazing what kind of gifts Mr. Market gives us…and it’s not even the holiday season yet!

    It’s already a fully allocated position for me, but if it continues to drop to $20 I may add yet again.

    Best wishes!

    • FI FighterNo Gravatar September 25, 2012, 7:12 pm

      DM,

      I know! It’s a little hard to believe that there have been so many good deals as of late, especially given how overpriced the general market still is. I’m with you, and will look to add more on further dips.

      In the meantime, I’m closely watching the industrials CAT and CMI, and looking to initiate a position with one, or both of these companies. Hopefully the market keeps doing us favors.

      Happy hunting!

  • The StoicNo Gravatar September 26, 2012, 3:37 am

    Hmmm… Looks like I’m the only one still holding out on initiating or adding to a position eh?? There is a word for my behavior; stubborn! I came so close yesterday to clicking that buy button when INTC was around 22.53ish at the close.

    *Sigh* oh well, perhasps today.

    Great addition FI, I agree with you completely that INTC is a solid company for the long term investor.

    • FI FighterNo Gravatar September 26, 2012, 10:10 pm

      The Stoic,

      Nothing wrong with being “stubborn”. In fact, I would call it being patient, which is an art itself. Sometimes it pays to wait for the market to come to you. Both figuratively and literally.

      Looks like INTC has been hovering around the $22.50 range the past few days, so it looks like you’ll still have an opportunity to add some shares. I like it short term for the dividend, and it makes for a strong long term value play, especially if they can figure out a way into mobile.

      Best wishes!

  • The Keichi OneNo Gravatar September 26, 2012, 4:21 pm

    I’ve been looking to add to my position on this as well but haven’t had the capital to do it as of late. If the price can stay where it is for another few weeks I’ll be right in there with ya!

    • FI FighterNo Gravatar September 26, 2012, 10:14 pm

      Keichi,

      Don’t you hate when that happens 😉

      I seem to run into that very problem quite frequently. As a matter of fact, there are many stocks on my wishlist that are getting close to being very attractively priced. I just hope they can hold steady or dip even lower to give me more time to add capital.

      Hopefully you get lucky and can get in on INTC in a few weeks at an attractive price.

      Best wishes. Keep blogging, I look forward to your updates!

  • JW @ AllThingsFinanceNo Gravatar September 28, 2012, 11:14 am

    Have you considered selling some covered calls against your positions? It would be a great way to generate some additional income on top of the dividends you receive. Check out a post I wrote on the topic a few weeks ago if you’re interested.

    • FI FighterNo Gravatar September 28, 2012, 5:24 pm

      JW,

      Thanks for the advice. I’m very interested in employing the use of covered calls and selling puts to generate extra cash flow. At the moment, I’m still focused on building up the core portfolio first. It’s probably something I’ll tackle on in the future. Maybe as soon as next year.

      I’ll check out your post now.

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