Is Dell’s Dividend Worth the Risk?

Dell is paying out dividends today, Oct. 28

Digital Content Manager
Oct 28, 2022 at 11:56 AM
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Dell Technologies Inc (NYSE: DELL) is an American technology company best known for its hardware products. The company’s product offering includes laptops, PCs, monitors. It also provides IT infrastructure including servers, storage, data protection, and converged and hyperconverged solutions for the software, cloud computing, and data storage industries.

Last month, Dell Technologies declared a quarterly cash dividend of $0.33 per share, indicating a forward dividend of $1.32 and a dividend yield of 3.58%. Shareholders on record by Oct. 19 can expect payment today, Oct. 28.

The stock has managed to rally off its Oct. 13 record low of $32.89, and is now up over 14% this month. However, the stock could run into issues at its 60-day moving average, which has flipped between pressure and support for the better part of the year. Plus, DELL is down over 30% in 2022. As a result, Dell now offers an extremely low valuation at a forward price-earnings ratio of 5.21 and a price-sales ratio of 0.28.

In addition, the business is estimated to report 8.7% earnings growth for fiscal 2023 and 3.3% earnings growth for fiscal 2024. However, its bottom-line growth expectations don't inspire much confidence for long-term investors, with estimates predicting just 0.8% revenue growth for fiscal 2023 and a 2% decline for fiscal 2024. Furthermore, Dell’s balance sheet remains an issue, adding to the list of long-term risks. Despite having $5.51 billion in cash, the balance sheet also holds $27.84 billion in total debt, which is slightly more than the company’s market cap of $27.70 billion. Nonetheless, DELL’s low valuation and high dividend yield continue to make the stock an intriguing option.

 

 

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