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5 Buy-Rated Dividend Stocks

Microchip Technology

Dividend Yield: 4.10%

Microchip Technology (NASDAQ: MCHP) shares currently have a dividend yield of 4.10%.

Microchip Technology Incorporated engages in the development, manufacture, and sale of semiconductor products for embedded control applications. The company has a P/E ratio of 48.21.

The average volume for Microchip Technology has been 1,973,500 shares per day over the past 30 days. Microchip Technology has a market cap of $6.8 billion and is part of the electronics industry. Shares are up 6.5% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Microchip Technology as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 17.0%. Since the same quarter one year prior, revenues rose by 26.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 130.44% to $128.91 million when compared to the same quarter last year. In addition, MICROCHIP TECHNOLOGY INC has also vastly surpassed the industry average cash flow growth rate of -56.72%.
  • Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.07 is very high and demonstrates very strong liquidity.
  • MICROCHIP TECHNOLOGY INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MICROCHIP TECHNOLOGY INC reported lower earnings of $1.66 versus $2.20 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.66).
  • The gross profit margin for MICROCHIP TECHNOLOGY INC is rather high; currently it is at 54.00%. Regardless of MCHP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCHP's net profit margin of 2.44% is significantly lower than the industry average.

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