Technology remains a low-yield sector. For example, the S&P 500 Information Technology Index sports a dividend yield of just 0.64%.
However, that implies significant room for payout growth over time — something that many mature technology companies are already delivering. In fact, technology — the largest sector weight in the S&P 500 — has been one of that index’s steadiest sources of dividend growth for a while now.
Much of that growth is being driven by mature tech companies, such as Dow components Cisco Systems (NASDAQ:CSCO) and International Business Machines (NYSE:IBM). Those stocks, among other old guard tech dividend payers, aren’t richly valued, indicating that investors don’t have to pay up to get these steady dividends.
“With price-to-earnings median multiples near the highest levels since the dot-com crash of 1999 and 2000, it may make sense to assess some of the legacy old-school technology stocks, especially those that pay a dependable dividend,” reports Lee Jackson for 24/7 Wall Street.
Cisco is one of the more alluring old school tech names when it comes to dividend dependability.
“Cisco’s cybersecurity products give clients the scope, scale and capabilities to keep up with the complexity and volume of threats. Putting security above everything helps corporations innovate while keeping their assets safe,” according to 24/7 Wall Street. “Shareholders receive a 2.31% dividend. Credit Suisse has a $73 target price on the Cisco Systems stock, and the consensus target is $62.63. Shares ended Wednesday at $63.96.”
Cisco and semiconductor maker Texas Instruments (NASDAQ:TXN), another reliable dividend grower, are both members of the SmartETFs Dividend Builder ETF (DIVS).
Texas Instruments “is also a big Apple supplier, so the long-term outlook for this venerable leader makes it a safer bet for investors with less risk tolerance,” adds 24/7 Wall Street. “Investors receive a 2.41% dividend. The BofA Securities price target for Texas Instruments stock is $255. The consensus target is $205.18, and shares closed most recently at $190.81.”
DIVS, which focuses on quality dividend payers with appealing dividend growth prospects, also holds Broadcom (NASDAQ:AVGO) and Microsoft (NASDAQ:MSFT), two other titans of tech dividend growth.
DIVS’ Asian counterpart, the Guinness Atkinson SmartETFs Asia Pacific Dividend Builder (ADIV), also features exposure to mature tech names, including Taiwan Semiconductor (NYSE:TSM) and Qualcomm (NASDAQ:QCOM).
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.