New technology companies look at dividends the way kids look at their grandfathers’ ear hair: Just plain nasty. Who needs dividends when you’ve got growth, and plenty of shiny new things to invest in?
But after tech companies reach a certain age — if they reach a certain age — they warm up to dividends. Dividends, after all, reward shareholders and executives alike. (And, for long-term stockholders, dividends have the same tax treatment as capital gains). And paying dividends is considered a Nice Thing To Do when you have more cash than you know what to do with.
Currently, 10 tech companies with four-star or better ratings from Standard & Poor’s have dividend yields higher than 2%, which is higher than the average stock in the S&P 500 index. The average yield: 2.73%.
That’s the good news. The bad news, more or less, is that these companies have lost an average 9.27% this year, even with dividends reinvested. Biggest loser: The identity-challenged Hewlett-Packard (HPQ), down 20.2%. Biggest gainer: Microchip Technology (MCHP), up 7.1%.
On the other hand, these are about the cheapest tech stocks you’ll find, and you get paid to wait for them to return to Wall Street’s favor. Intel, for example, trades for 12.7 times its estimated earnings. HP trades for a measly 8.2 times estimated earnings.
Bear in mind that in technology, things can always get worse. But generally speaking, it’s better to buy cheap than dear, and a dividend never hurts, whippersnappers. The 10 tech dividend stars:
- CA (ticker: CA), 3.36% dividend yield.
- Intel (INTC), 3.06%
- Microchip Technology (MCHP), 3%
- Cisco Systems (CSCO), 2.95%
- Qualcomm (QCOM), 2.88%
- Symantec (SYMC), 2.56%
- Xerox (XRX), 2.53%
- Corning (GLW), 2.36%
- Motorola Solutions (MSI), 2.35%
- Hewlett Packard (HPQ), 2.22%