Dividends allow shareholders to directly benefit from a company’s profits, by paying out part of it on a yearly, quarterly, or monthly basis. For investors seeking reliable income — so-called fixed income — stocks paying out dividends offer a great opportunity, especially in the current ultra-low interest (on other investment vehicles like bonds) environment. In short, dividend investors are less focused on stocks’ depreciation or appreciation in price.
The financial sector, utilities sector, and real estate sector are widely known for their high dividend payouts. REITS, or real estate investment trusts, are even lawfully obliged to pay out a percentage of their profits to their shareholders.
Dividends aren’t as pervasive among public tech companies, which tend to either invest their profits into further growth (research and development, marketing/sales) or to use stock buybacks to beef up their stock price instead. But there are some exceptions, and we’re about to reveal them to you.
Now, we don’t just want to point out tech stocks that offer a high dividend yield, that would be too easy. So we’ve also added the following conditions:
- The 5-year average dividend yield must be 2% or higher.
- The company’s market cap must be $5 billion or larger.
- The stock’s price can’t be lower than it was five years ago.
- They must be US companies, traded on either the New York Stock Exchange or the Nasdaq.
Using these criteria, we’ve generated a list of public companies, which we then sorted by their 5-year trading range (an indication for their long-term volatility). In summary, we want to find tech stocks with lower volatility and high dividends. Here are the results:
Verizon is the second-largest telecom company in the US, with a market capitalization of $224 billion. We’ve taken other telecommunications companies like AT&T and Comcast out of the equation, as they’re more diversified conglomerates with a considerably large stake in media.
By far, Verizon is the least volatile tech stock paying out a high annualized dividend. Its stock price’s 5-year trading range is between $49 and $62. Furthermore, Verizon paid out an average annual dividend yield of 4.5%.
Cisco is a globally operating tech company known for its networking hardware, software, and telecommunications equipment. It has a market capitalization of $190 billion.
Cisco is the second least volatile tech stock paying out a high annualized dividend. Its stock price’s 5-year trading range is between $29 and $58, considerably wider than Verizon’s. For the past five years, Cisco paid out an average annual dividend yield of 3%.
Maxim Integrated (MXIM)
A bit lesser known than previous companies, and with a market cap of just $15 billion, Maxim is a so-called semiconductor. The company designs, manufactures, and sells analog and mixed-signal circuits, chips powering smartphones, wearables, and healthcare and factory automation devices, among others.
Maxim is the third least volatile tech stock paying out a high annualized dividend. Its stock price’s 5-year trading range is between $32 and $64, and it pays an average annual dividend yield of 3%.
So there you have it: These three may not be the sexiest, high-flying tech companies around, but they’re offering relative stability for those who like to get ‘paid’ regularly and can’t stomach wild price changes.
Published May 25, 2020 — 14:10 UTC