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

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.

 

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JW @ AllThingsFinanceThe Keichi OneThe StoicDividend MantraFI Fighter Recent comment authors
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Dividend Growth Machine
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Thanks for your comment on my blog. It’s funny that we both made nearly identical purchases today. Hopefully INTC serves us well!

Dividend Mantra
Guest

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!

The Stoic
Guest

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.

The Keichi One
Guest

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!

JW @ AllThingsFinance
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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.

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