High Tech, High Dividends

05/18/2017 2:50 am EST

Focus: TECHNOLOGY

Harry Domash

Publisher, DividendDetective and Winning Investing

Harry Domash, a leading income and dividend specialists, maintains some 20 specialized model income portfolios in his Dividend Detective; here's a look at two ideas in his High Tech-High Dividends portfolio.

Qualcomm (QCOM) reported strong growth, but ruined the party when it reported that Apple (AAPL) would not pay chip manufacturing royalties owed to Qualcomm until the ongoing dispute between the two firms about the royalty amounts is resolved.

That news knocked around 20% off of Qualcomm’s expected June quarter EPS. Nevertheless, we’re still advising adding to QCOM.
Apple and QCOM will eventually settle and Qualcomm will likely end up collecting most of the withheld payments.

Moreover, QCOM is still on track to acquire NXT Semiconductors, a big player in the automotive chip business. Although already hot, that sector will get even hotter when mass produced self-driving cars start hitting the road.

Along those same lines, demand for semiconductor chips needed to implement factory automation, smart cars, and Internet of Things (IoT) applications is likely to skyrocket in coming years.

That’s why we’ve decided to add yet adding another chipmaker — Texas Instruments (TXN) — to the High Tech, High Dividend model portfolio.

TXN produces chips central to all of those applications. Even better, TXN likes to pay dividends. In November, it raised its quarterly payout by 32%. It’s currently paying a 2.5% yield.

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