The Highest-Yielding Safe Technology Dividends

24/7 Wall St.

View gallery

.
94073253
Investors love dividends. They also generally tend to love technology stocks. The problem is that the massive growth phase of the sector has moved to selective niche businesses now that we are in the post-PC and post-infrastructure world of technology.

Many tech giants and former growth stories have now matured, and some of them are returning massive amounts of capital by paying massive dividends. Investors can now hold technology stocks for hopeful upside in the decade ahead and can get paid well above-normal yields while they wait.

24/7 Wall St. wanted to do a search for the highest dividends in technology that are also the safest of the group for investors. A safe dividend refers to the company’s ability to pay that rate in good times and bad times, and of course it does not imply that the stocks will not fall in value if the sector or the market drifts lower.

Keep in mind that the number of S&P 500 companies paying dividends is at a 15-year high, with about 83% of the companies paying dividends to shareholders. Only about one-fifth of the S&P 500 yields 3% now that stocks hit new all-time highs, and the 10-year Treasury yield is currently 2.7%. Dividends are considered among the most straightforward measures of returning capital back to shareholders, and they are also meant to offer confidence of strength for years into the future.

We screened the technology sector of the S&P 500 and found that 21 technology stocks were offering yields of 2% or higher. We then screened out the telecom names and the companies with questionable dividend practices. We also screened out companies with market values of less than $10 billion, as well as companies with negative return on equity or a return on equity of less than 10%.

Technology companies that we arbitrarily do not consider technology were screened out as well, as were companies that do not have the income that can easily cover the dividend for years ahead. Consensus estimates have been taken from Thomson Reuters, and the implied price-to-earnings (P/E) ratios are based on estimates for each company’s current fiscal year.

Intel
> Stock price: $24.65
> 52-week range: $19.23 to $25.98
> Market cap: $123 billion
> P/E ratio: 13
> Yield: 3.65%

Intel Corp. (INTC) is the leader of the safe technology dividends, even if its stock has not been able to challenge its former glory days. The world is moving to a post-PC smartphone and tablet story, and Intel is only just now starting to make headway there with a very late start. We would also caution that at $24.70 its stock is almost $1.00 higher than what the consensus analyst price target is for the year ahead. Still, a 3.65% dividend yield is very high for a technology stock, but it is the closest to a 50% income payout, with some 47% of expected operating earnings being paid out in dividends. Intel’s 3.65% dividend is a high yield for a Dow Jones Industrial Average stock, with its yield the third highest of the 30 companies.


Filed under: Technology Tagged: CA, CSCO, INTC, MSFT, STX

View gallery

.

Rates

View Comments (0)