With dividends becoming increasingly more important, it is time to start looking for high dividend yields in unexpected places. The technology sector as a whole does not pay much of a dividend. The most popular technology stock ETF, PowerShares QQQ (NASDAQ:QQQ) pays a dividend of just 0.77%. However, there are some technology stocks that offer outsized dividends. This article will look at technology companies with high dividend yields that are sustainable.
- Yield: 2.69%
- Payout Ratio: 29%
- While not the highest yielding tech stock, MSFT 's dividend is the most sustainable. In addition to the low payout ratio, MSFT has over $6 per share in cash that could be used to boost the dividend.
- Yield: 3.18%
- Payout Ratio: 35%
- Similar to MSFT, INTC has plenty of cash ($2.91 per share) to increase the dividend if it chooses.
Taiwan Semiconductor (NYSE:TSM)
- Yield: 3.71%
- Payout Ratio: 56%
- TSM remains in a strong position to continue paying its dividend.
- Yield: 3.81%
- Payout Ratio:64%
- While the payout ratio is high, GRMN's yield is safe due to its $7.53 in cash per share.
Microchip Technology (NASDAQ:MCHP)
- Yield: 3.72%
- Payout Ratio: 68%
- Like GRMN, MCHP's payout ratio is high but sustainable. MCHP has $7.41 per share in cash.
Seagate Technology (NASDAQ:STX)
- Yield: 3.60%
- Payout Ratio: 65%
- STX's dividend is not as safe as the previously mentioned companies. While STX does have a lot of cash ($2.9 Billion), STX has a lot debt. ($3.48 Billion)
Linear Technology (NASDAQ:LLTC)
- Yield: 3.02%
- Payout Ratio: 47%
- LLTC's dividend is sustainable because the payout ratio is relatively low.
Texas Instruments (NYSE:TXN)
- Yield: 2.02%
- Payout Ratio: 28%
- TXN does have a significant amount of debt ($5.8 Billion), this makes TXN's yield more dangerous than the payout ratio would indicate. However, TXN is still in good shape to continue paying the dividend for now.
- Yield: 2.12%
- Payout Ratio: 36%
- XLNX has more cash ($1.76 Billion) than debt ( $903 Million.) The low payout ratio and net cash mean XLNX's dividend is sustainable.
Lexmark International (NYSE:LXK)
- Yield: 2.82%
- Payout Ratio: 23%
- LXK's dividend looks very safe. LXK has $16.24 per share in cash.
Technology stocks that offer solid dividends are a good way for income investors to diversify. While the amount of the dividend is important, so to is the sustainability of the dividend.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.