The Technology Sector is a group of companies engaged in the design, development, and production of various forms of technology. Some examples of industries included in this sector are: semiconductors, electronic components, telecommunications equipment, business and financial services, social media, software, and hardware.
Technology has traditionally been known as one of the more speculative sectors of the stock market. As a result, it isn’t one that gets much love from dividend growth investors.
Alternatively, the speculative nature of tech stocks led to one of the great boom and bust cycles in the stock market’s history during the late 90’s. The birth of the internet and the personal computer, and the optimism surrounding the companies that fostered their development, led to a huge run-up in valuations before the bursting of the dot-com bubble in 2000.
There were plenty of failed companies that never recovered after the collapse, but a handful of the tech giants did, and have now become some of the largest corporations in the world. Companies like Microsoft Corporation $MSFT, Apple Inc. $AAPL, Cisco Systems Inc. $CSCO, and Intel Corp. $INTC lost up to 90% of their share price, and in some cases, have yet to return to those 2000 highs.
However, they have now transitioned from being high-flying tech to slow and steady growers; with fortress balance sheets, high cash generation, and steadily growing dividends. Some of them have become almost utility-like in nature, with recurring revenue streams tied to royalties from patents or from annual fees from consumers for software or other services. This combination of characteristics makes them ideal dividend growth candidates to consider for your portfolio.
I have developed a watch list highlighting 25 of the technology companies that I feel offer the best combination of yield, financial strength, and expectations for growth in today’s market. The list is a diverse group, with slower growth companies like International Business Machines $IBM alongside higher growth and lower yielding options like Intuit $INTU, Visa $V and Mastercard $MA. I have even included non-dividend payers Alphabet $GOOGL and Facebook $FB, who I think may end up being strong dividend payers in the future.
The final list offers a little something for all types of investors, including those looking for immediate income and others looking for growth and capital gains.
Here is the list, which includes information as collected from the U.S. Dividend Champions spreadsheet, along with 52-week high/low information and a few other metrics.
Here is a link for the PDF version of the technology sector watch list.
On February 28th, my article covering the tech sector watch list was published on Seeking Alpha. It has expanded spreadsheets that include earnings estimates, dividend growth projections, and 5-year total return projections for the companies listed.
Here is a link to the article:
Return to the Sector Watch Lists.