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Recently, we discussed a defensive investing strategy for large-cap Technology stocks and argued that investing in high dividend yielding Tech stocks may be a viable strategy for the near future. The average returns of high and low dividend yielding large-cap Tech stocks have been very close to each other in 2011, however, investors may find high dividend yields appealing in the upcoming inflationary environment.

Similar defensive strategy can be valid for mid-cap tech stocks as well. Although defensive investing doesn't always give the best returns in bull markets, it provides better protection in down markets. Since we are concerned about Fed's monetary policy, we believe investors should be more cautious and pick defensive stocks with high dividend yields in the near future.

We compiled a list of 40 Tech Stocks (the sector classifications are sourced from Finviz) that have a market cap between $6B and $15B and ranked them based on their 12-month dividend yields. The stocks with dividends and no dividends, and their performances, are shown below:

STOCKS WITH DIVIDEND YIELDS

Dividend Yield

YTD Return

52-week Return

Frontier Communications Corp.

FTR

9.3%

-8.62%

22.2%

Windstream Corp.

WIN

7.5%

-2.19%

37.1%

Microchip Technology Inc.

MCHP

3.6%

15.92%

52.8%

Maxim Integrated Products

MXIM

3.1%

15.22%

58.7%

Linear Technology Corp.

LLTC

2.8%

-1.4%

26.5%

Analog Devices Inc.

ADI

2.2%

9.53%

48.1%

Xilinx Inc.

XLNX

1.9%

21.40%

50.3%

KLA-Tencor Corp.

KLAC

1.8%

6.46%

40.3%

Computer Sciences Corp.

CSC

1.6%

-11.74%

-9.4%

Iron Mountain Inc.

IRM

1.5%

32.35%

38.4%

Activision Blizzard Inc.

ATVI

1.5%

-6.37%

11.9%

CA Technologies

CA

0.8%

-6.45%

16.4%

Altera Corp

ALTR

0.5%

30.92%

104.1%

Roper Industries Inc.

ROP

0.5%

7.68%

44.1%

Amphenol Corporation

APH

0.1%

1.59%

29.1%

AVERAGE

6.95%

38.05%

STOCKS WITH NO DIVIDEND YIELDS

Dividend Yield

YTD Return

52-week Return

Symantec Corporation

SYMC

0.0%

13.50%

31.7%

Crown Castle International

CCI

0.0%

-6.41%

14.9%

Nielsen Holdings

NLSN

0.0%

23.82%

23.8%

SanDisk Corp.

SNDK

0.0%

-8.50%

9.1%

NVIDIA Corporation

NVDA

0.0%

17.34%

46.2%

First Solar Inc.

FSLR

0.0%

-4.64%

13.6%

Cerner Corporation

CERN

0.0%

27.80%

49.0%

Micron Technology Inc.

MU

0.0%

21.07%

10.5%

Autodesk Inc.

ADSK

0.0%

10.65%

43.7%

BMC Software Inc.

BMC

0.0%

14.91%

50.2%

Teradata Corporation

TDC

0.0%

30.59%

72.6%

Waters Corp.

WAT

0.0%

25.16%

46.9%

Red Hat Inc.

RHT

0.0%

-3.55%

50.7%

F5 Networks Inc.

FFIV

0.0%

-19.51%

55.6%

Western Digital Corp.

WDC

0.0%

5.75%

0.8%

Electronic Arts Inc.

ERTS

0.0%

42.55%

43.4%

NII Holdings Inc.

NIHD

0.0%

-7.25%

16.6%

Motorola Mobility Holdings

MMI

0.0%

-18.56%

-14.6%

Rovi Corporation

ROVI

0.0%

-6.37%

57.6%

Atmel Corporation

ATML

0.0%

13.64%

181.7%

Nuance Communications

NUAN

0.0%

16.01%

34.0%

MetroPCS Communications

PCS

0.0%

39.83%

109.2%

Akamai Technologies

AKAM

0.0%

-29.22%

-14.7%

VeriSign Inc.

VRSN

0.0%

21.50%

46.5%

AVERAGE

8.55%

38.91%

These two groups performed at almost the same level in the last 52-week period. In this period, the average return of the dividend yielding mid-cap technology stocks was 38.05% vs. 38.91% for the second group of 15 stocks with no dividend yields. The performances of these two groups were not very different since the beginning of this year, either. The average YTD return of the first group was 6.95%, underperforming the average YTD return of the second group by less than 2 percentage points. As the returns of the two groups are comparable in both periods, defensive investing with high dividend stocks may be a better option in the current monetary environment.

Top 10 mid-cap tech stocks with the highest dividend yields are as follows:

1. Frontier Communications Corp.: Frontier Communications Corp. is a telecommunications company providing telephone, internet and TV services in the United States. FTR has a high dividend yield of 9.3% and returned 22.2% during the past 12 months. However, FTR have performed negatively in 2011, returning -8.62% year-to-date. The stock has a market cap of $8.65B and P/E ratio of 45.74. D.E. Shaw has a large position in FTR. Bernard Horn's Polaris Capital and Mark Kingdon's Kingdon Capital also invested in FTR.

2. Windstream Corp.: Windstream Corp. is a telecommunications company providing telephone, internet and TV services in rural areas in the United States. WIN has a high dividend yield of 7.5% and returned 37.1% during the past 12 months. WIN performed negatively since the beginning of this year, losing 2.91% year-to-date. WIN traded at $13.24 recently. The stock has a market cap of $6.75B and P/E ratio of 24.84. D.E. Shaw and Jim Simons are among WIN investors.

3. Microchip Technology Inc.: Microchip Technology Corp. is a US company manufacturing microcontrollers and analog semiconductors. MCHP has a 3.6% dividend yield and returned 52.8% during the past 12 months. MCHP recently traded at $38.97 and gained 15.92% since the beginning of this year. The stock has a market cap of $7.36B and P/E ratio of 18.14. Andy Redleaf's Whitebox Advisors invested more than $200M in MCHP. Ken Griffin's Citadel Investment also holds more than $150M of MCHP.

4. Maxim Integrated Products (NASDAQ:MXIM): Maxim Integrated Products is a US company providing integrated circuits worldwide. MXIM has a 3.1% dividend yield and returned 58.7% during the past 12 months. MXIM recently traded at $26.70 and gained 15.22% since the beginning of this year. The stock has a market cap of $7.89B and P/E ratio of 19.24. Ken Griffin's Citadel Investment and P.T. Sparaggis' Alkeon Capital have the largest positions in MXIM.

5. Linear Technology Corp.: Linear Technology Corp. is a US company providing linear integrated circuits worldwide. LLTC has a 2.8% dividend yield and returned 26.5% during the past 12 months. However, LLTC have performed negatively in 2011, returning -1.40% year-to-date. LLTC recently traded at $33.88. The stock has a market cap of $7.72B and P/E ratio of 14.36. Jean-Marie Eveillard's First Eagle holds more than $200M of LLTC. Jim Simons and Ric Dillon also invested in LLTC.

6. Analog Devices Inc.: Maxim Integrated Products is a US company providing integrated circuits and analog semiconductors worldwide. ADI has a 2.2% dividend yield and returned 48.1% during the past 12 months. ADI recently traded at $39.96 and gained 9.53% since the beginning of this year. The stock has a market cap of $11.97B and P/E ratio of 13.82. William Von Mueffling's Cantillon Capital holds $175M in ADI. Jim Simons' Renaissance Technologies and P.T. Sparaggis' Alkeon Capital are also among ADI investors.

7. Xilinx Inc. (NASDAQ:XLNX): Xilinx Inc. is a US company providing programmable logic devices worldwide. XLNX has a 1.9% dividend yield and returned 50.3% during the past 12 months. XLNX also performed well in 2011, returning 21.4% year-to-date. The stock has a market cap of $9.10B and P/E ratio of 14.44. Ken Griffin's Citadel Investment invested more than $150M in XLNX. P.T. Sparaggis' Alkeon Capital also holds XLNX.

8. KLA-Tencor Corp.: KLA-Tencor Corp. is a US company manufacturing semiconductors and microelectronics for process control. KLAC has a 1.8% dividend yield and returned 40.3% during the past 12 months. KLAC recently traded at $41.08 and returned 6.46% since the beginning of the year. The stock has a market cap of $6.90B and P/E ratio of 10.56. Jean-Marie Eveillard's First Eagle holds more than $150M of KLAC. David Tepper, P.T. Sparaggis and Ken Fisher are among KLAC investors.

9. Computer Sciences Corp.: Computer Sciences Corp. is a US company providing IT outsourcing and system integration consulting services. CSC has a 1.6% dividend yield but lost 9.4% during the past 12 months. CSC also performed negatively in 2011, returning -11.74% year-to-date. CSC recently traded at $44.09. The stock has a market cap of $6.84B and P/E ratio of 8.33. John Osterweis' Osterweis Capital, Jean-Marie Eveillard's First Eagle and Boaz Weinstein's Saba Capital hold the largest positions in CSC.

10. Iron Mountain Inc.: Iron Mountain Inc. is a US company providing information management services worldwide. IRM has a 1.5% dividend yield and returned 38.4% during the past 12 months. IRM performed well this year as well, gaining 32.35% year-to-date. The stock recently traded at $33.08 and has a market cap of $6.64B. Richard Breeden's Breeden Capital has the largest position in IRM. Richard Perry and David Abrams also invested in IRM.

Source: Investing in High Dividend Mid-Cap Tech Stocks