Dividend Growth Stock Overview: Microchip Technology Inc.

Microchip Technology designs, manufactures and sells integrated circuits containing 
embedded control systems and associated memory products.
Photo: Freeimages.com/stockers9

About Microchip Technology Inc.

Microchip Technology develops, manufactures and sells embedded control systems and microcontrollers used in a variety of products, including robotics, remote controls, consumer electronics, security systems, and medical instruments. The company has a portfolio of more than 1,300 microcontrollers and has shipped more than 15 billion integrated chips since 1990. Microchip Technology is headquartered in Chandler, Arizona and employs 9,500 people.

The company’s strategic focus is on general purpose and specialized microcontrollers, and associated memory products. In addition to earning revenues by selling its products, Microchip Technology also earns revenue on the licensing of proprietary technologies to foundries and integrated device manufacturers around the world.

Microchip Technology has four manufacturing facilities; one each in Tempe and Chandler, Arizona; Gresham, Oregon; and Bangkok, Thailand. Overall, the company has the capability of manufacturing integrated circuit wafers using 0.18 through 0.5 micron technology. (Smaller numbers mean that the circuit logic can be more tightly packed onto an integrated chip, allowing for more complicated and advanced circuitry.) Products manufactured by other sources generate roughly 40% of its total sales.

Microchip Technology breaks out its product sales by three geographical markets: the Americas, Europe and Asia. Roughly 60% of the company’s net sales are to customers in the Asian region, including about 30% of total sales to customers in China and 15% to customers in Taiwan. The remaining 40% of sales are split evenly between customers in the Americas and Europe.

The company trades under the ticker symbol MCHP.

Microchip Technology’s Dividend and Stock Split History

Microchip Technology Dividends

After compounding dividends very quickly early on, Microchip Technology’s dividend growth has slowed to a crawl since 2009.

Microchip Technology began paying dividends in 2002 and has grown them since then. Unlike most dividend companies, Microchip Technology increases its dividend each quarter. It has done this since 2010 and since 2013 has consistently increased the dividend by half a penny each quarter. This has resulted in slow dividend growth rates since 2009. Over the last 5 years, Microchip Technology’s compounded dividend growth rate is less than 1% a year. Prior to 2009, the company increased the dividend very quickly, giving the company faster long-term growth rates. Over the last decade, the company’s dividend growth rate is 12.26% and since the first full year of dividend payments in 2003, Microchip Technology has compounded dividends an average of 25% a year.

The company has split its stock multiple times. In September 1993, Microchip Technology executed a 2-for-1 stock split. The company then followed up with 3-for-2 splits in April 1994, November 1994, January 1997, February 2000, September 2000, and May 2002. A single share of stock purchased prior to the first split would now be 22.78 shares.

Over the 5 years ending on December 31, 2015, Microchip Technology Inc. stock appreciated at an annualized rate of 9.90%, from a split-adjusted $28.78 to $46.15. This underperformed the 10.20% compounded return of the S&P 500 index over the same period.

Microchip Technology’s Direct Purchase and Dividend Reinvestment Plans

Microchip Technology does not have a direct purchase or dividend reinvestment plan. In order to invest in Microchip Technology stock, you’ll need to purchase it through a broker. Most brokers will allow you to reinvest dividends without any fee. Ask your broker for more information on how to set this up if you are interested.

Helpful Links

Microchip Technology Inc.’s Investor Relations Website

Current quote and financial summary for Microchip Technology Inc. (finviz.com)

 

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