Technology businesses are becoming the blue chips of the 21st century. That being stated, not all tech is created identically. There’s patron tech instead of organization tech, software programs instead of hardware, and various hardware technologies.
Two big-cap dividend payers inside the hardware area are Intel (NASDAQ: INTC) and Seagate Technologies (NASDAQ: STX). Today, let’s look at the area the area for investment bucks.
What Intel and Seagate do
Intel is the undisputed leader in imperative processing gadgets (CPUs) that are the center processors of each non-public computer system and information facility. However, recently, Intel has diversified its commercial enterprise, shopping for up sup-to-dategrammable gate array chip maker Altera in 2015 and self-riding vehicle software maker Mobileye in 2017. Intel also has a smaller section dedicated to garage reminiscences, such as NAND flash and a new type of memory called three-D XPoint.
Seagate, however, is by and large inside the commercial enterprise of tough disk drives (HDDs), in which it had the largest marketplace proportion remaining year, at 40%. HDDs are the most inexpensive shape of garage generation these days. However, HDDs are also being changed in many applications via NAND flash. Still, the HDD business has to be around for some time to return. With only three primary gamers — Seagate, Western Digital, and Toshiba — Seagate ought to be capable of milk profits from HDDs simultaneously as the commercial enterprise slowly declines.
Seagate has additionally made investments to try to future-proof itself. It invested $1.Three billion in Toshiba Memory Company (TMC) was taken personally via a Bain Capital-led consortium in early 2018. TMC makes NAND flash, so Seagate has some publicity for the NAND market. Seagate also has small Ripple funding, which created the Ripple cryptocurrency (XRP) and distributed blockchain ledger.
Recent outcomes
Both Intel and Seagate are suffering from global technology demand, which is currently going through a gentle patch. Yet, over the last couple of years, Intel’s boom has actually been advanced, and its dominant eighty percent processor marketplace proportion has afforded it better margins as well. Thus, it seems Intel is a superior-first-class agency.
- Winner: Intel
- Valuation
Of course, it is not just the quality of the organization but also the rate you pay as an investor. Turning to the future PE and corporation price-to-EBITDA multiples, Seagate appears the more inexpensive of the 2, even though simply slightly.
Both corporations’ valuation metrics are pretty low, meaning the market predicted little to no growth for each in 2019. While the mild part might go to Seagate, these valuations are so close that I will name this class a tie.
- Winner: Tie
- Payout ratios
Both corporations are also massive, mature coin cows, meaning that while you can not see much inside an eye-popping revenue boom, every organization returns plenty of coins to shareholders through dividends and share repurchases.
Seagate has a much larger dividend yield at five.18%, at the same time as Intel’s dividend, is less than 1/2, which is 2.28%. However, dividends are not the complete story; Intel returns more of its coins to shareholders in proportion to repurchases. That’s why its shareholder yield- which counts dividends and repurchases mixed- is much towards Seagate’s. That must allow Intel to grow its percentage fee and dividend quicker than Seagate over the years. Still, Seagate does preserve a slight side here.
- Winner: Seagate
- Threats and risks
Both agencies also have risks to watch out for. Intel these days hit a snag by falling behind competitors in the race to fabricate 10nm chips. Competitor Advanced Micro Devices already has 7nm chips (equal to Intel’s 10nm) out to market and appears poised to take some market share. Meanwhile, Intel says its 10nm chips will ultimately be ready by the holiday season of 2019.
At the same time, Seagate is combating a gradual decline in its essential HDD enterprise. Nevertheless, in the latest records-centric financial system, the call for reasonably priced storage should last for a while. Over the long term, however, Seagate will likely need to conform to new merchandise and/or offerings.
Since Intel’s hazard is an extra close-to-term hiccup and Seagate’s looks like a bigger long-term hassle, Intel appears safer over the long haul.
- Winner: Intel
- Intel for protection
Intel comes out the victor right here with wins to at least one, as it appears to be the more secure pick. However, Seagate will be thrilling, with an extra hazard for those searching for additional yield and upside. Its dividend is excessive, expectations are low, and it does have the Ripple investment. Still, most investors ought to stay with the steadiness and variety of Intel.
