All investors have the goal of building wealth, but not everyone takes the same route. Investing in dividends, especially those that offer moderate to high yields, is a path that may take more time, but provides the same end goal. To find companies with reliable and sound yields, we looked specifically in the technology sector and focused foremost on those generating strong profits. We then narrowed our list of tech dividends to include those that have a recent 'Buy' rating from industry analysts. The list below provides you with a place to start your research process.
Return on Assets (ROA) illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
We first looked for technology dividend stocks. Then we screened for businesses with strong profitability (ROA > 10%)(1-year fiscal EPS growth rate>10%). Next, we screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We did not screen out any market caps.
Do you think these stocks will offer healthy returns? Use our screened list as a starting point for your own analysis.
1) Intel Corporation (INTC)
|Industry:||Semiconductor - Broad Line|
Intel Corporation has a dividend yield of 3.43%, a payout ratio of 34.12%, a return on assets of 17.90%, an earnings per share growth rate of 18.84%, and an analysts' rating of 2.40. The short interest was 2.93% as of August 16, 2012. Intel Corporation designs, manufactures, and sells integrated digital technology platforms, primarily in the Asia-Pacific, the Americas, Europe, and Japan.
The company offers microprocessors that process system data and controls other devices in the system; and chipsets, which sends data between the microprocessor and input, display, and storage devices, such as keyboard, mouse, monitor, hard drive or solid-state drive, and CD, DVD, or Blu-ray drives; system-on-chip products that integrate its processing functions with other system components, including graphics, audio, and video onto a single chip; wired network connectivity products; and wireless connectivity products. It also provides mobile phone components comprising baseband processors, radio frequency transceivers, and power management integrated circuits; and mobile phone platforms, such as Bluetooth wireless technology and GPS receivers, software solutions, customization, and interoperability tests.
2) J2 Global Communications Inc. (JCOM)
|Industry:||Internet Software & Services|
J2 Global Communications Inc. has a dividend yield of 3.09%, a payout ratio of 34.42%, a return on assets of 18.31%, an earnings per share growth Rate of 34.57%, and an analysts' rating of 2.30. The short interest was 26.49% as of August 16, 2012. J2 Global provides cloud services to businesses of various sizes through the Internet worldwide. It offers online fax, virtual phone systems, hosted email, email marketing, online backup, customer relationship management, and bundled suites of these services. The company markets its services principally under the eFax, eVoice, FuseMail, Campaigner, KeepItSafe, LandslideCRM, and Onebox names.
3) Applied Materials, Inc. (AMAT)
|Industry:||Semiconductor Equipment & Materials|
Applied Materials, Inc. has a dividend yield of 3.05%, a payout ratio of 31.99%, a return on assets of 10.36%, an earnings per share growth rate of 108.26%, and an analysts' rating of 2.50. The short interest was 1.02% as of August 16, 2012. Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic (PV), and related industries worldwide. The company's Silicon Systems Group segment offers a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits.
This segment provides systems that perform primary processes used in chip fabrication, including atomic layer deposition, chemical vapor deposition, physical vapor deposition, electrochemical deposition, rapid thermal processing, chemical mechanical planarization, wet cleaning, and wafer metrology and inspection, as well as systems that etch or inspect circuit patterns on masks used in the photolithography process.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz.