Technology is the buzzword today. This was once the booming industry and many people invested in lots of technology companies that were growing like mushrooms back in the 1990s. Of these, only a few survived the storm and remain in business even today. Even among the ones that exist today, not all companies are recommended for investment purposes due to various factors like low profitability, low earnings, lackluster performance at the stock market, too many failed product launches and inconsistent rates of dividend. Though a company is lagging behind in all aspects, it becomes a hit among its shareholders if it has the capacity to pay out a reasonable rate of dividends year after year. Dividends are the main yardsticks with which a company’s reputation in the eyes of its shareholders is measured. If you are specifically looking for a company in the technology sector that pays consistent dividends, you can consider the following options:
Garmin Limited
Garmin Limited (GRMN, Financial) may not offer high cash dividends for its shareholders, but it is known for its consistency. It is one of the top technology-cum-dividend stocks exactly for this reason. Currently the dividend yield of the company is 3.7% and for the year 2014, it paid out a dividend of $1.89 per share as cash dividend. The sales of Garmin are not great; however the company has a diverse product basket to fall back upon to offset this. GPS gadgets are not the only products of Garmin now. The company has set foot on territories like navigation systems for airlines and marine vehicles, in-dash systems for cheap and luxury automobiles, GPS systems for trucks and logistics technology, apps for locating lost pets, fitness apps and the like. More than $1.2 billion cash was reported by Garmin during 2013 and this figure was more than enough to pay out dividends for another 3 years at least.
Seagate Technology
One of the companies that turned itself over financially in the last few years is Seagate Technology (STX, Financial). This hardware company was written off by many during the recession of 2008; however the company bounced back strongly and reported a whopping 50% increase in earnings from 2012 to 2013, and there has been no looking back since. The company declared $0.54 dividend per share for Q4 2014 as compared to $.043 dividend per share for Q1, Q2 and Q3 of 2014. Increase in the number of smartphones simultaneously led to an increase in the cloud technology as well as a result of which, all servers of Seagate were occupied with lots of business opportunities during 2014.
Microsoft
Microsoft Technologies (MSFT, Financial) underwent a restructuring in 2013 as a result of which share prices have shown a continuous increasing trend. The last two quarters of 2014 saw Microsoft declaring a dividend of $0.31 per share as against the $0.28 that was declared for the first two quarters of 2014. During the recession of 2008, the dividend per share was just about $0.11 per share. Microsoft has come a long way from there. Changes in top management, announcement regarding staff reduction and the challenging road ahead for Windows Phone and Microsoft Surface products are some of the areas where Microsoft is bringing its experience to its benefit. Currently the free cash and investments that are lying in Microsoft’s books is over $100 billion, which is why it becomes a safe bet for shareholders.
Intel
Though Intel (INTC, Financial) didn’t announce any increase in dividends for 2014, it is still considered as one of the top technology dividend stocks, mainly because of its performance in various sectors. The top management of Intel has already announced that dividends would be increased from $0.90 per share in 2014 to $0.96 per share in 2015. More than $20 billion is generated in the form of cash flow every year, and the company has at least $30 billion as bank deposits. Its performance in the mobile chip product, Broadwell, will also be an interesting factor to watch out for. However, the abundance of free cash in Intel’s books would mean that the company will still manage to stay afloat even if Broadwell fails.
Cisco
If share price trends are considered per se, CISCO (CSCO, Financial) might not present an attractive picture. What is important here is the stability it offers to its shareholders. CISCO’s value would be fully understood only by shareholders who are long timers here. Currently dividend for Q1 2015 is $0.19 per share, same as the rates for Q2, Q3 and Q4 2014. It was only during 2011 that the company has started to pay out dividends at a quarterly rate of $0.06 per share. To pay out more than thrice this rate within a short span of three years is an achievement in itself. The company has at least $45 billion bank deposits, which gives room for expecting some increase in dividends in the coming years.
Conclusion
Technology, being an unpredictable industry, has seen giants fall and minnows grow in the last few years. Growth, innovation, profits, sales, reputation, etc., take the backseat in such a scenario. The only factor that will raise a company’s value is consistency, even if it is at a slow pace. Investors would always prefer to get steady returns year on year than get huge amounts during one quarter and nothing at all for the next two years. The above companies offer the much-needed consistency when it comes to dividends and therefore enjoy a good reputation among shareholders.
