It seems only yesterday Apple announced it was finally offering a handsome dividend to its impatient investors. Now, with a healthy 2.5% yield Apple has earned itself a place in the NASDAQ Technology Dividend Index (NASDAQ:NQ96DIVUS). The index is tracked by the First Trust NASDAQ Technology Dividend Index Fund (TDIV). On Monday, March 18 Apple will be joining 14 other new tech stocks on the index, partially taking place of 9 departures.
The change brings to light the role of technology stocks as the largest U.S. dividend-paying sector in dollar terms. And according to the Wall Street Journal, "companies in the S&P 500 index are expected to pay at least $300 billion in dividends in 2013, according to S&P Dow Jones Indices, which would top last year's $282 billion."
Expectations are high, so we screened the technology universe for stocks that could meet expectations.
While the average dividend yield of the S&P 500 is 2.01%, the average yield of technology sector in the index is 2.96%. To make our list interesting to technology investors looking for higher than average yield we pulled only technology stocks with market caps above $300 million offering yields above the average 2.01%.
We screened these names for higher gross, operating and pretax margins than their industry averages. This suggests the companies are operating more efficiently than their competitors. This lends more credibility to a continued high-yield dividend payout.
We were left with 3 stocks, all of which are -unsurprisingly- in the S&P500 index and members of the aforementioned NASDAQ Technology Dividend Index.
Compare performance of the three stocks listed below:
Do you think these 3 technology stocks have a reliable dividend?
1. Intel Corporation (INTC): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide.
- Market cap at $107.28B, most recent closing price at $21.69.
- Dividend yield: 4.16%, or $0.22 per share. In regards to the $0.225 payment on March 1, Intel President CEO Paul Otellini said "With the payout of this quarterly dividend, Intel's dividend and stock buyback program will have returned approximately $119 billion to stockholders since the program's inception."
- TTM gross margin at 75.67% vs. industry average at 57.55%. TTM operating margin at 27.44% vs. industry average at 17.41%. TTM pretax margin at 27.88% vs. industry average at 16.19%.
2. Analog Devices Inc. (ADI): Engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits used in industrial, communication, computer, and consumer applications.
- Market cap at $14.21B, most recent closing price at $46.44.
- Dividend yield: 2.93%. Its recent dividend payment of $0.34 per share is a 13.3% increase from its last payment. It has raised dividend payments for 11 consecutive years.
- TTM gross margin at 68.45% vs. industry average at 57.55%. TTM operating margin at 30.44% vs. industry average at 17.41%. TTM pretax margin at 29.29% vs. industry average at 16.19%.
3. Xilinx Inc. (XLNX): Designs, develops, and markets programmable platforms in North America, the Asia Pacific, Europe, and Japan.
- Market cap at $10.03B, most recent closing price at $38.33.
- Dividend yield: 2.29%. On 3/05/13 Xilinx announced a $0.03 increase in quarterly dividend, raising its cash dividend per share from $0.22 to $0.25.
- TTM gross margin at 68.71% vs. industry average at 57.55%. TTM operating margin at 27.17% vs. industry average at 17.41%. TTM pretax margin at 25.01% vs. industry average at 16.19%.
*Profitability data sourced from Fidelity.