Intersil Corp (ISIL) is generating healthy profits and delivering one of the highest dividend yields in the space at 6.3%, and despite the company’s declining revenues in the past three years, is poised to continue paying a dividend as ISIL‘s new CEO implements internal changes, says Tore Svanberg, Analyst at Stifel, Nicolaus & Co., Inc.
“[Intersil] has struggled the last three, four years mainly due to execution, potentially mismanagement, but clearly it’s a company that has struggled, revenues have declined every year over the last three years. That said, they do generate very healthy profitability; they generate good cash flow, so they actually pay a very healthy dividend, and the dividend yield is right now 6.3%, and to me that’s probably among the highest dividend yields in this space,” Svanberg said.
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Svanberg points to the company’s balance sheet in determining ISIL‘s position to continue to pay the dividend, and he also notes that the company’s new CEO has the potential to make changes internally while still maintaining the high dividend yield.
“So then the question is: How sustainable is this dividend? Well, when I look at, again, at the company’s balance sheet, I think they are in a very strong position to continue to pay the dividend. Not only that, but they also very recently hired a new CEO who I think is going to make some changes internally that will serve as catalyst. So I think, as an investor, you can patiently wait for these changes and still be rewarded with a 6.3% dividend,” Svanberg said.
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