Lexmark's Dividend: Be Optimistic

Mar. 7.13 | About: Lexmark International, (LXK)

Lexmark International Inc. 's (NYSE:LXK) market cap is currently at $1.45B, and shares are trading at $22.37. The P/E ratio of 9.5 and P/S ratio is 0.4. The dividend yield of Lexmark International, Inc. stock is 4.93%. Lexmark International, Inc. has had an annual average earning growth of 3.2% over the past 10 years. Lexmark recently declared a quarterly dividend of $0.30 per share, or $1.2 annualized. The dividend will be payable on March 15, 2013, to stockholders of record on March 4, 2013, with an ex-dividend date of February 28, 2013.

Price: 22.37 Yield: 4.93% Annualized Dividend: 3.2%

Dividends are hot in technology returning value to investors. Standard & Poor's cites:

Companies pay out the most dividends than any of other sector in the S&P 500 Index. This pay out is expected to increase 15% this year. Expectations currently is very high poising shareholders with capitalizing on the greatest investing boom in almost 60 years. These dividend tech stocks have now replaced the consumer staples sector. Tech dividend stocks are attractive to investors for its diversity in investing profiles and strategy.

The Dividend Report states:

Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation.

Lexmark's capital allocation framework is to pursue acquisitions that support growth and increase software and solutions capabilities, while returning more than 50 percent of free cash flow to shareholders, on average, through quarterly dividends and share repurchases. Since mid-2011, Lexmark has returned to shareholders more than $500 million in the form of dividends and share repurchases. Lexmark International Inc.'s (LXK, $24.10, -$3.85, -13.77%) fourth-quarter earnings fell 91% as the printer maker continued to post declining hardware and supplies revenue. The company also guided for current-quarter adjusted earnings below analysts' estimates and forecast an 11% to 13% decline in revenue; analysts were looking for an 11% decrease.

Technology companies have evolved to show significant potential to grow their dividends. The S&P 500 payout ratio has been at a record low. Highest payout ratios capitalize on highest market valuations. Regular dividend payments tend to be enforced through its shareholders which has changed the sector in the last decade. Stock prices decline as their cash balances increased. By raising dividend ROI outlook is healthy and promising lasting to 10 years. At the end of the 10-year period, that investor will own an investment that is now yielding more than 10% on the original investment amount. Long term dividend tech stocks investors in today's global economic conditions are not able to forecast sustained growth, therefore returns are determined based on growth and dividends.

Lexmark International Inc. is engaged in developing, manufacturing and supplying printing, imaging, document workflow, and content management solutions for the office. The Company operates in the office imaging and enterprise content and business process management (ECM and BPM) markets. Lexmark's products include laser printers, inkjet printers, multifunction devices, dot matrix printers and the associated supplies/solutions/services, and ECM and BPM software solutions and services. Lexmark's products are sold in more than 170 countries in North and South America, Europe, the Middle East, Africa, Asia, the Pacific Rim and the Caribbean. The Company operates in two segments: Imaging Solutions and Services (NYSE:ISS) and Perceptive Software. On October 18, 2011, the Company acquired Pallas Athena Holdings B. V. (Pallas Athena). In March 2012, the Company acquired BDGB Enterprise, including its United States subsidiary Brainware, Inc. In January 2013, the Company acquired Acuo Technologies.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.