The American economy is going through a soft patch. Unemployment is stubbornly high, headline inflation numbers are rising and the stock market declined by more than 7% since early May. One of the most important problems facing the U.S. economy is the unsustainably high budget deficits. We don’t think long-term interest rates will stay low for a very long time. We believe treasury bond investors can do much better by switching to dividend yielding stocks than the 10-year treasuries that yield a paltry 3%.
Dividend yielding tech stocks is definitely one attractive alternative. We compiled a list of dividend yielding technology stocks (the sector classifications are sourced from Finviz) and ranked them based on the number of hedge funds invested in each stock. We think we can follow the smart money and pick the dividend yielding stocks with the best prospects.
| Stock | Ticker | Yield | No of Funds | Value (x1000) |
| Microsoft Corporation | MSFT | 2.7% | 93 | 5,378,793 |
| QUALCOMM | QCOM | 1.5% | 65 | 3,812,055 |
| Cisco Systems | CSCO | 1.5% | 51 | 2,993,223 |
| Oracle Corp. | ORCL | 0.8% | 49 | 2,174,740 |
| Hewlett-Packard Company | HPQ | 1.3% | 46 | 2,718,513 |
| Intel Corp. | INTC | 3.9% | 42 | 2,725,519 |
| International Business Machines | IBM | 1.8% | 37 | 2,473,693 |
| Corning Inc. | GLW | 1.1% | 32 | 906,051 |
| Texas Instruments | TXN | 1.6% | 29 | 1,084,439 |
| Verizon | VZ | 5.5% | 28 | 534,758 |
| Broadcom Corp. | BRCM | 1.1% | 27 | 345,554 |
| Applied Materials Inc. | AMAT | 2.5% | 25 | 1,719,185 |
| AT & T | T | 5.7% | 24 | 671,223 |
| Automatic Data Processing | ADP | 2.7% | 20 | 304,810 |
| Thomson Reuters | TRI | 3.4% | 7 | 135,625 |
Microsoft (MSFT)tops our list with 93 hedge funds having the stock in their portfolios. These hedge funds collectively invested $5.4 Billion in MSFT. Microsoft has a dividend yield of 2.7%. Jim Simons’ Renaissance, David Tepper’s Appaloosa, Leon Cooperman’s Omega Advisors, and Tom Steyer’s Farallon are some of the hedge funds that are bullish about Microsoft. Whitney Tilson is extremely bullish about Microsoft too. He predicted that Microsoft will reach $35 by the end of 2011. Greenlight Capital’s David Einhorn also likes MSFT but wants to get rid of Steve Ballmer. Einhorn expressed his investment thesis in MSFT in detail at the Ira Sohn Investment Conference (Read his entire speech here).
Qualcomm (QCOM) ranks second in our list. There were 65 hedge funds with a total investment of $3.8 Billion in QCOM. The stock has a dividend yield of 1.5%. Lee Ainslie’s Maverick and Stephen Mandel’s Lone Pine had the largest stake in QCOM among the 300+ funds we are following.
Three stocks with the highest dividend yield in our list are AT&T (T), Verizon (VZ), and Intel (INTC). Intel recently raised its dividend and now has a dividend yield of 3.9%. The real dividend monsters are Verizon and AT&T. Verizon has a 5.5% dividend yield and there were 28 hedge funds in VZ at the end of March. Phill Gross’ Adage Capital had $149 Million in Verizon and George Soros had a $65 Million position. Billionaire investor Leon Cooperman also started a brand new $78 Million position in Verizon during the first quarter. T offers a higher dividend yield of 5.7%. Phill Gross has the largest position in T as well
Disclosure: I am long T, MSFT.
