Whether or not to invest in tech companies that offer dividends continues to be a hot topic. However, if you are a long-term income investor, these types of investments are worth considering. Especially when you focus on tech companies that offer moderate to high yields. With this in mind, we developed a scan of tech companies with these desirable yields. To ensure that these companies will be able to continue to produce at this level, we analyzed profitability as well. All of the companies that made our cut have shown dedication to generating strong earnings. Further, they are not laden with debt which can hinder profitability over the long run. We think you will find our list of tech dividend stocks worthy of a second look.
The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.
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.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
We first looked for technology dividend stocks. We next screened for businesses that have maintained a sound capital structure (D/E Ratio<.1). From here, we then looked for companies that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). We then screened for businesses with strong profitability (ROA > 10%) (Net Margin [TTM]>10%). We did not screen out any market caps.
Do you think these stocks will break through to new highs? Use this list as a starting-off point for your own analysis.
1) City Telecom HK Ltd. (CTEL)
|Industry||Telecom Services - Foreign|
|Long Term Debt/Equity Ratio||0.00|
|Return on Assets||12.37%|
City Telecom (H.K.) Limited, together with its subsidiaries, engages in the provision of international and fixed telecommunications services to residential and corporate customers in Hong Kong and Canada. The company's international telecommunications services include international direct dialing, international calling cards, international call forwarding, and fax to email services. Its fixed telecommunication services comprise broadband Internet access, local voice over Internet protocol services, telephony, IP-TV, and corporate data services. In addition, the company engages in the lease and maintenance of switching equipment and provision of operational services. As of August 31, 2011, the company had approximately 1,247,000 subscriptions for fixed telecommunications network services, including 590,000 for broadband, 476,000 for local telephony, and 181,000 for IP-TV services subscriptions. City Telecom (H.K.) Limited was founded in 1992 and is based in Kwai Chung, Hong Kong.
2) American Software, Inc. (AMSWA)
|Long Term Debt/Equity Ratio||0.00|
|Return on Assets||10.55%|
American Software, Inc., together with its subsidiaries, engages in the development, marketing, and support a portfolio of software and services that deliver enterprise management and collaborative supply chain solutions worldwide. The company operates in three segments: Supply Chain Management, Enterprise Resource Planning, and Information Technology Consulting. The Supply Chain Management segment provides supply chain solutions, which include supply chain planning, inventory optimization, manufacturing, and transportation and logistics solutions to streamline the market planning, management, production, and distribution of products for manufacturers, suppliers, distributors, and retailers.
It also markets and sells Demand Solutions product line to small and midsize enterprises; and offers Logility Voyager Solutions suite to customers with distribution-intensive supply chains comprising upper-midsize and Fortune 1000 companies. The Enterprise Resource Planning segment offers purchasing and materials management, customer order processing, financial, e-commerce, flow manufacturing, and traditional manufacturing solutions, as well as provides industry-specific business software to retailers and manufacturers in the apparel, sewn products, and furniture industries.
The Information Technology Consulting segment provides information technology staffing and consulting services, as well as support for software products, such as software enhancements, documentation, updates, customer education, consulting, systems integration, and maintenance services. The company serves retail, apparel, consumer packaged goods, chemicals, pharmaceuticals, industrial products, and other manufacturing industries through its direct and indirect sales channels. American Software, Inc. was founded in 1970 and its headquarters is in Atlanta, Georgia.
3) Garmin Ltd. (GRMN)
|Industry||Scientific & Technical Instruments|
|Long Term Debt/Equity Ratio||0.00|
|Return on Assets||13.59%|
Garmin Ltd., together with its subsidiaries, designs, develops, manufactures, and markets global positioning system enabled products and other navigation, communication, and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets worldwide. The company offers a range of automotive navigation products, and various products and applications designed for the mobile GPS market; GPS enabled handheld products for hunters, hikers, geocachers, outdoors enthusiasts, cyclists, and golfers; dog tracking systems; tracker systems; and training assistants for athletes.
It also provides handhelds, network products and multifunction displays, fixed-mount GPS/chartplotter products, instruments, fish finders, radars, autopilots, VHF radios, marine networking products, and sounder products. In addition, the company offers GPS-enabled navigation, VHF communications transmitters/receivers, multi-function displays, electronic flight instrumentation systems, automatic flight control systems, traffic advisory systems and traffic collision avoidance systems, terrain awareness and warning systems, instrument landing system receivers, surveillance products, audio panels, and cockpit datalink systems. The company's sells its products through a network of independent dealers and distributors, as well as through original equipment manufacturers. Garmin Ltd. was founded in 1990 and is based in Schaffhausen, Switzerland.
4) China Mobile Limited (CHL)
|Long Term Debt/Equity Ratio||0.04|
|Return on Assets||13.03%|
China Mobile Limited, an investment holding company, provides mobile telecommunications and related services primarily in the Mainland China. It offers various services comprising local calls, domestic long distance calls, international long distance calls, domestic roaming, and international roaming. The company also provides voice value-added services, including caller identity display, caller restrictions, call waiting, call forwarding, call holding, voice mail, and conference calls; data services, which primarily include short messaging, wireless application protocol, multimedia messaging, and color ring services, as well as Java Applications, interactive voice response, PIM, and others; and mobile reading, mobile gaming, mobile video, mobile mailbox, mobile market, and Internet data center services.
In addition, it offers telecommunications network planning, design, and consulting services; roaming clearance services; technology platform development and maintenance services; and mobile data solutions, and system integration and development services, as well as operates a network and business coordination center. Additionally, China Mobile Limited sells mobile phone handsets and devices. As of December 31, 2011, it served approximately 650 million customers. The company was formerly known as China Mobile (Hong Kong) Limited and changed its name to China Mobile Limited in May 2006. China Mobile Limited was founded in 1997. The company is based in Central, Hong Kong, and is considered a Red Chip company due to its listing on the Hong Kong Stock Exchange. China Mobile Limited is a subsidiary of China Mobile Hong Kong (BVI) Limited.
Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/17/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.