Unique High Yield Dividend Stock, Low Downside, Strong Financials

Shankar N profile picture
Shankar N


  • That Seagate’s revenues are on the decline is a known fact. But complementary channels of income are being built, and the company is positive about returns on that front.
  • Does the company have strong enough financials to take a further beating on stock price and keep on ticking on dividends?
  • Is this risky investment worth the trouble? It might well be.

Seagate (NASDAQ:NASDAQ:STX) is a 35-year veteran of the data storage business with 52,000 employees around the world and 9,000 patents to its credit.

In recent times, the company has been moving from being purely a data storage provider to a company that provides solutions aimed at harnessing that stored data - a significant transition that has been forced due to the disruption that is taking place in the increasingly interconnected world.

Cloud solution providers are slowly taking away the necessity to store things locally. Gone are the days when Gmail offered few GBs of storage - we have unlimited storage now. With each passing day, the need to even store media files locally is diminishing - if not on its way to becoming extinct. The question is: Why even bother with local storage when I have Instagram and Flickr that can hold my pictures, and YouTube to take care of large video files. So, from the personal usage perspective, the need to store data locally is thinning, with company after company fighting for my presence.

Furthermore, PCs are on the wane and mobile devices are on the rise, further denting the storage requirement that is the bread and butter of data storage companies such as Seagate.

Things get even more depressing when you look at the data storage requirement from the enterprise angle. The cloud industry has taken off in a big way, and enterprises are slowly adopting this new technology that promises to take care of the infrastructure headache with a simple solution. To put it in another way, Amazon and Microsoft are telling companies to forget creating an IT infrastructure unit - especially if you are a company with average data operation requirements.

The requirement for personal data storage is declining, and it will continue as cloud takes off, thus

This article was written by

Shankar N profile picture
MBA, B.E AWS Certified Cloud Practitioner

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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