Semiconductor behemoth Intel Corp. (NASDAQ: INTC – $48.61) announced that its Board of Directors has approved a $15 billion increase in its authorized stock repurchase program. The company had $4.7 billion remaining under its existing repurchase authorization as of Sept. 29, 2018. Under this authorization, Intel is not required to purchase shares, but may choose to do so in the open market or through private transactions at times and amounts determined by the company based on its evaluation of market conditions and other factors. The company’s capital allocation strategy remains unchanged. Intel focuses on building value by first investing in itself and growing its capabilities; then looks to supplement and strengthen its capabilities through acquisition and strategic investments; and finally provides the return realized by these investments to its shareholders through its dividend program and opportunistic stock repurchases.
The shares still appear to have room to run thanks to the company’s recent strong earnings momentum. Though the stock’s share price has taken a step back of late, along with the entire semiconductor industry, I believe the breather is warranted given its generally strong showing over the past few years. In addition to the share repurchase announcement, INTC yields 2.5% at current quotations and the dividend has risen about 10% annually over the past ten years to a current annual rate of $1.20 per share.