Dell Raises Profit-Growth Target and Increases Cash Returns to Shareholders

PC and software firm Dell Technologies has announced an upward revision of its profit-growth target, aiming to return 80% of free cash flow to shareholders, up from the previous target range of 40% to 60%. The company shared these updates during a meeting with securities analysts in New York.

Dell expects annual revenue growth of 3% to 4% going forward, with adjusted profit growth of 8% or better. While the revenue-growth forecast remains unchanged, the new profit-growth target represents an increase from the previous 6% forecast. Additionally, Dell plans to increase its stock-repurchase plan by $5 billion and aims to boost its dividend by 10% or more annually through fiscal 2028. Currently, Dell shares offer a dividend yield of 2.2%.

Analyst Amit Daryanani from Evercore ISI commented that the unchanged revenue growth outlook seems conservative, considering the positive impact of generative artificial intelligence, which is expected to persist in the future. Daryanani expressed positivity regarding the stronger capital returns but found the unchanged revenue forecast slightly disappointing.

Dell’s long-term growth projections include 2% to 3% in its client-solutions group, primarily PCs, and 6% to 8% in its infrastructure solutions group, encompassing servers, storage, networking hardware, and other enterprise-software products. The company also anticipates net income to convert to adjusted free cash flow at a rate of 100% or better.

Chairman and CEO Michael Dell expressed confidence in the company’s future prospects, stating, “We are incredibly well positioned for this next wave of technology expansion, growth, and progress.” He highlighted Dell’s leading positions in various areas, emphasizing the ability to deliver sustained value creation for shareholders in the years to come.

Dell has significantly reduced its core debt position since acquiring EMC in 2017, reducing it from $48.9 billion to $14.6 billion.

In conclusion, Dell’s revised profit-growth target and increased cash returns to shareholders demonstrate the company’s commitment to delivering value and sustained growth. With a strong market position and a focus on emerging technologies, Dell is well-positioned for future success.