Income investors looking to increase their exposure to the technology sector have many more choices than they did a decade ago. Intel (INTC) and Microsoft (MSFT) have been dividend stalwarts for more than 5 years now. Even Apple (AAPL) has initiated a dividend recently. Another technology stock dividend investors should consider is not as well-known, but has compelling valuations and a solid dividend yield as well.
"Maxim Integrated Products (MXIM) engages in designing, developing, manufacturing, and marketing various linear and mixed-signal integrated circuits worldwide." (Business description from Yahoo Finance)
6 reasons MXIM is solid value play for income investors at $26 a share:
- The stock yields 3.7% and dividend payouts have grown at an average of 4% annually over the past five years, despite challenging economic times.
- MXIM is selling near the bottom of its five year valuation range based on P/CF and P/E.
- Jefferies just upgraded the stock from a "hold" to a "buy" and moved its price target to $33 from $29 a share. The analyst firm stated in its upgrade announcement "We think MXIM benefits as chipmakers on leading edge processes see transistor cost curves flatten, and we believe its Mixed Signal/Analog capabilities uniquely positions it to outgrow the industry over the next several years. We also like the 3.7% dividend yield, one of the highest in the semis, and believe that it is undervalued base on its growth and dividend payout".
- The company has over $600mm in net cash on the books (just under 10% of market capitalization)
- Maxim has beat earnings estimates each of the last five quarters. The average beat over consensus estimates has averaged 12% over the past four quarters.
- The stock has technical support at just under current price levels (See chart)