Yahoo Finance 7 Top Tech Stocks for Dividend Growth
Don't overlook technology for income.
When investors think of technology stocks, they often think of the high-octane growth names like Amazon.com (ticker: AMZN) or Netflix (NFLX) that have disrupted the old way of doing things. And when investors look for income opportunities, they typically gravitate toward sleepier sectors like utilities or consumer staples. But technology stocks can frequently offer impressive dividend growth -- and sometimes, they can offer these payouts without sacrificing a commitment to growth. A tech company produces items more quickly and with less input costs and can easily commit hundreds of millions of dollars toward dividends. Here are seven tech companies that have made a serious commitment to paying back shareholders.
Digital Realty Trust (DLR)
Digital Realty is an interesting pick if you like dividends and income, because it's structured as a real estate investment trust. REITs get special tax treatment but must deliver 90 percent of their taxable income to shareholders. So how can a real estate company be a tech company, too? DLR owns and operates huge warehouses of servers and data centers. Think of it as the owner of the places where information from "the cloud" has to live. It's an intriguing play on tech because there's reliable revenue from the rent on technology-related buildings.
Current dividend: 3.9 percent
Microsoft Corp. (MSFT)
One of tech's highest fliers lately has been Microsoft, which is up by double digits in 2018 and has surged 50 percent or so in the last year. But in addition to share appreciation, MSFT stock has a strong history of dividend growth that should entice investors. Though the current yield is less than 2 percent, Microsoft started paying dividends regularly at 8 cents a share in 2004. That quarterly payout has exploded to 42 cents a share at present, and is proof that as Microsoft grows it will grow its dividend in kind.
Current yield: 1.7 percent
Seagate Technology (STX)
If you simply want yield, then consider hard drive manufacturer Seagate. This is not as dynamic a business as other tech companies, but reliable hardware revenue feeds reliable dividend payments. After suspending its dividend during the financial crisis, STX reinstated its payout at 18 cents a share in 2011, and that payday has surged to 63 cents quarterly at present. While there may not be a lot of fireworks in the memory market as data storage remains a cheap and low-margin industry, there is plenty of reliable revenue to fuel dividends and future dividend growth.
Current yield: 4.2 percent
Texas Instruments (TXN)
Semiconductor company Texas Instruments may not sound like a dynamic company, but its dividend history is noteworthy. The company paid out 30 cents in dividends in calendar 2007 before the financial crisis but paid out $2.48 cents in 2017. Like Seagate, there isn't a lot of hype in the behind-the-scenes business of making semiconductors and other electronics components. But since everything seems to have a computer chip in it these days, Texas Instruments has plenty of demand for its products -- and plenty of revenue to support its reliable and growing dividend.
Current yield: 2.2 percent
Cisco Systems (CSCO)
Cisco is another tech stock that recently instituted dividends, making its first payment in 2011. But after that first payout of 6 cents a quarter, CSCO has increased payments to shareholders and currently delivers 33 cents a share. A few years ago, many investors were worried the IT giant was falling behind, but strategic and organization changes have rejuvenated Cisco stock. The tech giant has surged 19 percent since Jan. 1 and has a bright future. That's good news for shareholders hoping for its stock to rise, but also for those holding CSCO for the dividend growth potential.
Current yield: 2.9 percent
Oracle Corp. (ORCL)
Another unsung tech stock largely overlooked a few years ago is Oracle, an enterprise software firm increasingly under pressure from cloud computing competitors. However, a strong business cycle plus improvements in operations have helped ORCL mount a pretty good run in 2018. Shares are up about 12 percent since Jan. 1. On the dividend front, Oracle instituted its first-ever quarterly payout in 2009 at just 5 cents a share. That has almost quadrupled in about 10 years to 19 cents a share presently. Continued share appreciation plus continued dividend growth is a great combo for shareholders.
Current yield: 1.5 percent
HP (HPQ)
HP is the printer and computer division of the old Hewlett-Packard Co., which was split off from its software and services unit Hewlett Packard Enterprises (HPE) in 2015. While the consulting arm offers a bit more growth potential and innovation than the old school inkjet printers and laptops for which HP was known 10 years ago, there is still a reliable revenue stream from this hardware operation. That reliable revenue stream supports a nice dividend. And thanks in part to a leaner operation and a series of favorable profit reports, HP is doing quite well in 2018, with shares up about 13 percent year-to-date.
Current yield: 2.3 percent
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