Old Tech with Juicy Dividends

03/08/2017 7:00 am EST


Charles Carlson

Editor, DRIP Investor

Some of the juiciest dividends are found in the technology sector, especially some “old” tech names that have been doing well of late; three in particular are Cisco Systems (CSCO), Intel (INTC), and Microsoft (MSFT), observes dividend expert Chuck Carlson, editor of DRIP Investor.

Cisco Systems beat earnings expectations in the latest quarter. The firm continues to make strides in boosting its security offerings.

Reflecting its confidence in the future, Cisco boosted its dividend nearly 12% to a quarterly rate of $0.29 per share, payable April 26. Based on the new quarterly rate, the stock yields 3.4%.

Cisco Systems would benefit nicely from corporate tax reform. The company has nearly $72 billion in cash and securities on its balance sheet, with more than $62 billion held overseas.

It’s tough to find a stock with such a potent mixture of quality, yield, dividend growth, and financial firepower. I like the stock’s steady total-return potential and recommend these shares at current prices.

Intel also posted per-share profits in the December quarter that beat estimates. The earnings beat was the company’s seventh consecutive quarter of outpacing analysts’ consensus earnings estimate.

Intel has been trying to reduce its dependence on the PC market, and the firm appears to be making some headway into other areas, such as chips for data centers and the “Internet of things.”

The dividend yield of nearly 3% is certainly a plus. I look for these shares to outperform the broad market in 2017.

Microsoft is one of those “old” tech names that doesn’t get much media attention these days. But that hasn’t hindered the stock price.

Indeed, these shares have been moving to a series of all-time highs in recent months, driven partly by continued steady earnings results.

Microsoft held more than $122 billion in cash and equivalents at the end of December, with most of it overseas. Thus, lower tax rates on repatriation of those funds could lead to massive stock buybacks and dividend increases.

Yielding nearly 2.5%, the stock provides an excellent total-return holding for any DRIP portfolio.

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