Seagate Technology Raises Its High-Yield Dividend and Increases Share Repurchase Authorization

Not all tech stocks have had a stroll in the park in 2020. Take Seagate Technology (NASDAQ: STX), for instance. While pockets of the industry are experiencing unprecedented growth due to the pandemic, this company's legacy digital memory hardware is struggling to hang onto the positive traction it was building over the course of the last year. A dividend payout increase and new share repurchase authorization sweeten the deal for shareholders, but they should expect more turbulence ahead.

I started eyeing Seagate early in 2019. A solid dividend payment still handily covered by long-term free cash flow (revenue less cash operating and capital expenses) generation caught my eye, and pessimism due to a cyclical downturn for semiconductor stocks made shares look too cheap to ignore.

While the thesis played out at first, 2020 hasn't been so kind. Seagate stock is down 19% on the year as of this writing as it struggles to rebound to pre-COVID-19 levels. The problem? Fiscal 2020 revenue (12 months ended July 3, 2020) managed to increase only 1% from the year prior, and free cash flow fell 3% to $1.13 billion -- good for a decent free cash flow profit margin of 10.8%.

Source Fool.com