4 Tech Dividends Up to 13.3% – Buy 1, Sell 3

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Technology changes so fast these days that firms in the sector can see their profits quickly vanish.

Sadly, their dividends can disappear just as quickly!

Recently, we’ve seen companies such as Windstream (WIN), Frontier Communications (FTR) and Allegheny Technologies (ATI) cut or outright drop their dividends, with sky-high yields suddenly evaporating, leaving retirement investors in the lurch.

More pain could be on the way. A trio of tempting tech-stock yields, including two double-digit payouts, look destined for failure.

These stocks might seem like a shoo-in as contrarian investing targets. By simply buying over-punished stocks and waiting for a reversion back to a positive mean – think the “Dogs of the Dow” – investors could collect twofold on both the recovery and the elevated dividends.…
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Don’t take any stated yields for granted these days! The financial news has been flooded with dividend cuts lately, with Teva Pharmaceutical (TEVA) and Mattel (MAT) taking the hatchet to their payouts, and telecom Windstream (WIN) dropping its dividend too.

It’s dangerous to buy headline yields – or even supposedly “safe” blue chips with more modest dividends – without looking at the profits funding these payouts. Companies with high payout ratios (how much in earnings, funds from operations and other measures a company pays out in the form of dividends) are a twofold risk:

  1. High payout ratios can lead to a slowing in dividend growth, which means your payout is increasingly likely to fall behind inflation.


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Income investors often ignore the technology sector. That’s a shame, because tech stocks have been one of the best sources of dividend growth over the past few years.

Plus, some familiar names now pay substantial yields. In fact, in just a minute, I’ll introduce you to seven tech stocks that offer payouts into the mid-double digits!

But first, let’s talk about the biggest income mistake that countless investors are making right now.

Most first-level thinkers pile into “defensive” stocks like consumer staples and utilities. Unfortunately, while most of these companies do offer secure dividends, they don’t offer much upside.

And investors who “don’t care because they’re in it for the dividends” end up with payout raises that severely lag those lavished upon tech investors:

Utilities and Staples:
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About Author

Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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