Microchip Technology Inc. (NASDAQ:MCHP) is very shareholder friendly with the profits they are generating. They paid out 24.8% of its operating cash flow as dividends which is the the third most of any semiconductor company. This results in a very lucrative 3% dividend yield (or a 120+ basis points more than the 10-year treasury yields!). Other valuation metrics are supportive of MCHP as well. MCHP trades at a 20% discount to the MSCI World Index on P/CF basis. It also trades at 10-20% discount to its 10-year historical average for P/CF, P/S, and P/B.
Finally, the technical perspective has improved. After being stuck in a trading range for the past several years, MCHP has recently broken through resistance and has made a new relative high against the MSCI ACWI.
All in all, while semiconductors and Microchip Technology Inc. (NASDAQ:MCHP) specifically may no longer be the “go-go” growth stocks they were in the tech bubble, they now offer investors impressive profitability at reasonable multiples, all while continuing to invest more in innovation than almost any other companies in the world.