Why NASDAQ:MCHP is a Top Pick for Dividend Investors.

MICROCHIP TECHNOLOGY INC (NASDAQ:MCHP) has caught the attention of dividend investors as a stock worth considering. NASDAQ:MCHP excels in profitability, solvency, and liquidity, all while providing a decent dividend. Let's delve into the details.

A Closer Look at Dividend for NASDAQ:MCHP

ChartMill assigns a Dividend Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing various dividend elements, such as yield, historical performance, dividend growth, and sustainability. NASDAQ:MCHP has been awarded a 7 for its dividend quality:

• MCHP's Dividend Yield is rather good when compared to the industry average which is at 2.23. MCHP pays more dividend than 91.43% of the companies in the same industry.
• The dividend of MCHP is nicely growing with an annual growth rate of 11.69%!
• MCHP has been paying a dividend for at least 10 years, so it has a reliable track record.
• MCHP has not decreased their dividend for at least 10 years, which is a reliable track record.
• MCHP pays out 32.09% of its income as dividend. This is a sustainable payout ratio.

Evaluating Health: NASDAQ:MCHP

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:MCHP, the assigned 5 for health provides valuable insights:

• MCHP has an Altman-Z score of 4.62. This indicates that MCHP is financially healthy and has little risk of bankruptcy at the moment.
• The Debt to FCF ratio of MCHP is 1.92, which is an excellent value as it means it would take MCHP, only 1.92 years of fcf income to pay off all of its debts.
• MCHP has a Debt to FCF ratio of 1.92. This is in the better half of the industry: MCHP outperforms 64.76% of its industry peers.
• Although MCHP does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

What does the Profitability looks like for NASDAQ:MCHP

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:MCHP has earned a 9 out of 10:

• MCHP's Return On Assets of 15.16% is amongst the best of the industry. MCHP outperforms 80.95% of its industry peers.
• The Return On Equity of MCHP (36.12%) is better than 91.43% of its industry peers.
• MCHP has a better Return On Invested Capital (21.46%) than 89.52% of its industry peers.
• The last Return On Invested Capital (21.46%) for MCHP is above the 3 year average (11.80%), which is a sign of increasing profitability.
• The Profit Margin of MCHP (28.14%) is better than 86.67% of its industry peers.
• In the last couple of years the Profit Margin of MCHP has grown nicely.
• MCHP has a Operating Margin of 38.68%. This is amongst the best in the industry. MCHP outperforms 92.38% of its industry peers.
• MCHP's Operating Margin has improved in the last couple of years.
• MCHP has a Gross Margin of 67.93%. This is amongst the best in the industry. MCHP outperforms 87.62% of its industry peers.
• In the last couple of years the Gross Margin of MCHP has grown nicely.

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Our latest full fundamental report of MCHP contains the most current fundamental analsysis.

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.