Co-produced with Treading Softly
Here at High Dividend Opportunities, we typically do not invest in the latest "in vogue" sector. We are immediate income investors with a strong value investing streak, all of which are guided by the principles within our Income Method.
Today we want to look at a technology company that offers a compelling yield for its sector and a large potential for capital gains as well.
Seagate Technology (NASDAQ:STX) offers a current yield of 5.7% and is one of two major players in the HDD (Hard Disk Drive) space. For years it was directly competing with Western Digital (WDC) for supremacy.
Recently both have lagged the market (SPY) in performance:
WDC has clearly underperformed both STX and SPY in general. WDC also was cut from consideration as an "income" stock due to the suspension of its dividend in April.
Company Overview
To understand STX's headwinds and direction, we need to take a moment to review a brief history of where they are coming from.
STX was founded in 1979 and released its first product in 1980 - a 5mb HDD. Ever since then it has been a major player in the technology space. Usually, it's seen in direct competition with WDC. HDDs enjoyed a long life as the major successful way to store data, and as personal computing exploded globally, STX and WDC were the main places to get HDDs.
Many of you will likely remember seeing STX HDDs for sale as a way to upgrade your PC's overall memory.
Fast forward to today. The need for storage is everywhere. Cell phones, smartwatches, laptops, tablets, and an assortment of other devices all require data storage. The issue with these devices is they do not require HDD to operate. They use flash-based memory or SSD (solid-state drive) to function. This is not STX's cup of tea.
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