5 Growing Tech Stocks To Consider For Their Dividends

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Includes: AMAT, DXC, HRS, TCCO, WRLS
by: Vatalyst

This article will evaluate 5 dividend-paying tech stocks to determine if they belong in your portfolio. Sophisticated investors should take advantage of these tech names because they -- and their dividends -- are growing.

Harris Corporation (NYSE:HRS) has a market cap of $4.42 billion with a price-to-earnings ratio of 7.99. The stock has traded in a 52-week range between $32.68 and $53.39. The stock is currently trading around $37. The company reported second-quarter revenues of $1.67 billion compared to revenues of $1.46 billion in the second quarter of 2010. Second-quarter net income was $134 million compared to net income of $151 million in the second quarter of 2010.

One of HRS’ competitors is the Boeing Company (NYSE:BA). BA is currently trading around $64 with a market cap of $47.45 billion and a price-to-earnings ratio of 13.51. Boeing pays a dividend which yields 2.6%, versus HRS, whose dividend yields 3.1%.

HRS is an international communications and information technology company that serves the government and private industry. The company has been profitable in each of the last ten years. Over the last five years the company has increased its net income by 136%. The company has also been an above-average dividend-paying company. HRS has paid quarterly dividends since 1982, and has increased its dividend in each of the last five years by a total of 212.5%. The stock price has not performed well this year. Over the last 52 weeks, the stock is down by 17.3%, but it is up by 16.2% over the last three years. The stock is currently in a downward trend, but I believe that the company is solid, and that the stock will eventually rebound. I would not buy this stock now, but would reconsider when it breaks out of its downward trend. I rate HRS as a hold.

Telular Corporation (NASDAQ:WRLS) has a market cap of $88.49 million with a price-to-earnings ratio of 2.4. The stock has traded in a 52-week range between $3.01 and $8.90. The stock is currently trading around $6. The company reported third-quarter revenues for the period ended on June 30th of $12.8 million, compared to revenues of $11 million in the third quarter of 2010. Third-quarter net income was $2 million compared to $960,000 in the third quarter of 2010.

One of WRLS' competitors is Honeywell International Inc. (NYSE:HON). HON is currently trading around $49 with a market cap of $38.69 billion and a price-to-earnings ratio of 15.79. HON pays a divided which yields 2.8%, versus WRLS, whose dividend yields 6.9%.

HON provides cellular communication products and security equipment. The company has been growing, and its earnings have improved in each of the last four years. Year-over-year third quarter revenues increased by 16%, while third quarter net income increased by 112%. The company began paying quarterly dividends in the fourth quarter of 2010 and now pays a $0.40 dividend with a 6.9% dividend yield. WRLS should have no problem maintaining the dividend, as it has a strong free cash flow, and no debt. Investors seem impressed with WRLS' clean balance sheet and consistent earnings. The stock price has increased by 88.42% over the last 52 weeks. In spite of the stock's price run-up, it is still cheap. The price-to-earnings ratio is 2.4, and the price-to-book ratio is 1.46. I believe that the stock of WRLS is undervalued, for a company with growing earnings and a high yield dividend. I rate WRLS as a buy.

Computer Science Corporation (CSC) has a market cap of $4.74 billion with a price-to-earnings ratio of 6.13. The stock has traded in a 52-week range between $25.60 and $56.61. The stock is currently trading around $31. The company reported first-quarter revenues for the period ending on June 30th, in the amount of $4.03 billion compared to revenues of $3.94 billion in the first quarter of 2010. First-quarter net income was $183 million compared to net income of $143 million in the first quarter of 2010.

One of CSC's competitors is Accenture Plc (NYSE:ACN). ACN is currently trading around $59 with a market cap of $38.07 billion and a price-to-earnings ratio of 17.31. ACN pays a dividend which yields 2.4%, versus CSC, whose dividend yields 2.7%.

CSC provides information technology services to government and corporate clients. The company is a slow-growing company that has had flat revenues for the last four years. Over the last three years, net income has decreased by 51.3%. Not surprisingly, the stock price is also going down. The stock price has fallen by 38% over the last 52 weeks and is 45.9% off of its 52-week high. There is no news that would lead me to believe that CSC is about to turn things around. I rate CSC as a sell.

Technical Communications Corporation (NASDAQ:TCCO) has a market cap of $13.85 million with a price-to-earnings ratio of 2.82. The stock has traded in a 52-week range between $6.01 and $17.00. The stock is currently trading around $8. The company reported third quarter revenues for the period ending on June 30th, in the amount of $4.02 million compared to revenues of $6.35 million, in the third quarter of 2010. Third quarter net income was $1 million compared to net income of $2.42 million in the third quarter of 2010.

One of TCCO competitors is Motorola Solutions (NYSE:MSI). MSI is currently trading around $45 with a market cap of $15.45 billion and a price-to-earnings ratio of 12.38. MSI pays a dividend which yields 2%, versus MSI, whose dividend yields 5.5%.

TCCO sells high-tech security systems. In May of 2010 the company began making quarterly dividend payments, and it currently pays a dividend of $.040. TCCO increased its 2010 net income by 734%. During the 2010 fiscal year the stock price benefitted from the rise in earnings and increased by 159%. However, in the 2011 fiscal year, earnings have slowed significantly and will not match 2010. TCCO’s stock has performed poorly in 2011, and is down by 18.67% over the last 52 weeks. This company has a short dividend history, during which the capital losses have far exceeded any benefit an investor would have received from the dividend income. The recent hit to the stock has made the stock cheap (price-to-earnings ratio 2.82, price-to-book ratio 1.0). I would wait to see fourth-quarter earnings before making any decisions about this stock. I rate TCCO as a hold.

Applied Materials Inc. (NASDAQ:AMAT) has a market cap of $15.28 billion with a price-to-earnings ratio of 7.99. The stock has traded in a 52-week range between $9.70 and $16.93. The stock is currently trading around $12. The company reported third-quarter revenues for the period ending on July 30th, in the amount of $2.79 billion, compared to revenues of $2.52 billion in the third quarter of 2010. Third-quarter net income was $476 million, compared to net income of $123 million in the third quarter of 2010.

One of AMAT’s competitors is KLA-Tencor Corporation (NASDAQ:KLAC). KLAC is currently trading around $44 with a market cap of $7.32 billion and a price-to-earnings ratio of 9.41. KLAC pays a dividend which yields 3.2%, versus AMAT, whose dividend yields 2.8%.

AMAT sells equipment that is used to manufacture semiconductors and flat-panel monitors for computer and TV’s. Over the last six quarters, AMAT’s revenues have been relatively flat. The stock price has also been flat, having lost 3.49% over the last 52 weeks and 1% over the last three years. The dividend has increased by 33% over the last three years. This company is going nowhere fast, and with a dividend yield of 2.8%, investors can find better places to put their money. I rate AMAT as a hold.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.