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

Take a closer look at MICROCHIP TECHNOLOGY INC (NASDAQ:MCHP), a stock of interest to dividend investors uncovered by our stock screener. NASDAQ:MCHP excels in fundamentals and provides a decent dividend, all while maintaining a reasonable valuation. Let's break it down further.

Assessing 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:

• Compared to an average industry Dividend Yield of 1.83, MCHP pays a better dividend. On top of this MCHP pays more dividend than 91.59% of the companies listed in the same industry.
• On average, the dividend of MCHP grows each year by 11.69%, which is quite nice.
• MCHP has paid a dividend for at least 10 years, which is a reliable track record.
• MCHP has not decreased their dividend for at least 10 years, which is a reliable track record.
• MCHP pays out 36.71% of its income as dividend. This is a sustainable payout ratio.

A Closer Look at Health for NASDAQ:MCHP

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NASDAQ:MCHP scores a 5 out of 10:

• MCHP has an Altman-Z score of 5.19. This indicates that MCHP is financially healthy and has little risk of bankruptcy at the moment.
• MCHP has a better Altman-Z score (5.19) than 61.68% of its industry peers.
• MCHP has a debt to FCF ratio of 2.02. This is a good value and a sign of high solvency as MCHP would need 2.02 years to pay back of all of its debts.
• MCHP's Debt to FCF ratio of 2.02 is fine compared to the rest of the industry. MCHP outperforms 69.16% of its industry peers.
• Even though the debt/equity ratio score it not favorable for MCHP, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

Understanding NASDAQ:MCHP's Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:MCHP has achieved a 9:

• MCHP has a better Return On Assets (14.60%) than 83.18% of its industry peers.
• With an excellent Return On Equity value of 33.28%, MCHP belongs to the best of the industry, outperforming 91.59% of the companies in the same industry.
• MCHP has a better Return On Invested Capital (19.44%) than 92.52% of its industry peers.
• MCHP had an Average Return On Invested Capital over the past 3 years of 14.53%. This is above the industry average of 10.73%.
• The 3 year average ROIC (14.53%) for MCHP is below the current ROIC(19.44%), indicating increased profibility in the last year.
• With an excellent Profit Margin value of 27.59%, MCHP belongs to the best of the industry, outperforming 89.72% of the companies in the same industry.
• MCHP's Profit Margin has improved in the last couple of years.
• Looking at the Operating Margin, with a value of 37.14%, MCHP belongs to the top of the industry, outperforming 93.46% of the companies in the same industry.
• In the last couple of years the Operating Margin of MCHP has grown nicely.
• The Gross Margin of MCHP (67.03%) is better than 86.92% of its industry peers.
• MCHP's Gross Margin has improved in the last couple of years.

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Check the latest full fundamental report of MCHP for a complete fundamental analysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.