Published on November 20th, 2017
The technology industry is one of the most exciting areas of the stock market, known for its rapid growth and propensity to create rapid and life-changing wealth for early investors.
Until recently, the technology was not known for being a source of high-quality dividend investment ideas. This is no longer the case. Today, many of the most appealing dividend stocks come from this enticing sector.
With that in mind, we’ve compiled a list of all 331 dividend-paying technology stocks complete with important investing metrics, which you can access below:
Keep reading this article to learn more about the benefits of investing in dividend-paying technology stocks.
How To Use The Technology Stocks List To Find Dividend Investment Ideas
Having an Excel document containing the names, tickers, and financial metrics for all dividend-paying technology stocks can be extremely powerful.
The document becomes significantly more powerful if the user has a working knowledge of Microsoft Excel.
With that in mind, this section will show you how to implement two actionable investing screens to the technology stocks list. The first screen that we’ll implement is for stocks with dividend yields above 3%.
Screen 1: High Dividend Yield Technology Stocks
Step 1: Download the technology stocks list at the link above.
Step 2: Click on the filter icon at the top of the dividend yield column, as shown below.
Step 3: Change the filter setting to “Greater Than” and input 0.03 into the field beside it, as shown below.
The remaining stocks in this spreadsheet are dividend-paying technology stocks with dividend yields above 3%, which provide a basket of securities that should appeal to retirees and other income-oriented investors.
The next section will show you how to simultaneously screen for stocks with price-to-earnings ratios below 20 and market capitalizations above $10 billion.
Screen 2: Low Price-to-Earnings Ratios, Large Market Capitalizations
Step 1: Download the technology stocks list at the link above.
Step 2: Click on the filter icon at the top of the price-to-earnings ratio column, as shown below.
Step 3: Change the filter setting to “Less Than” and input 20 into the field beside it, as shown below.
Step 4: Exit out of the filter window (by clicking the exit button, not by clicking the Clear Filter button). Then, click on the filter icon at the top of the market capitalization button, as shown below.
Step 5: Change the filter setting to “Greater Than” and input 10,000 into the field beside it, as shown below. Note that since market capitalization is measured in millions of dollars in this spreadsheet, inputting “$10,000 million” is equivalent to screening for stocks with market capitalizations above $10 billion.
The remaining stocks in the Excel spreadsheet are dividend-paying technology stocks with price-to-earnings ratios below 20 and market capitalizations above $10 billion. The size and reasonable valuation of these businesses make this a useful screen for value-conscious, risk-averse investors.
You now have an understanding of how to use the technology stocks list to find investments with certain financial characteristics. The remainder of this article will discuss the relative merits of investing in the technology sector.
Why Invest In The Technology Sector
The technology industry is known for having some of the best-performing stocks over short periods of time. Indeed, it’s hard to overstate how much wealth was created for the early investors in companies like Facebook (FB), Microsoft (MSFT), or Apple (AAPL).
Unfortunately, the technology industry is also known for causing one of the most dramatic stock market bubbles on record. The 2000-2001 dot-com bubble destroyed billions of dollars of market value because technology stocks were trading at such irrationally high valuations.
Source: YCharts
This notable bear market might lead some investors to avoid the technology sector entirely.
Fortunately, today’s technology sector is tremendously different from its predecessor in the early 2000s. While technology stocks were previously valued based on page views or other vanity metrics, this school of thought has changed significantly. Today’s technology stocks are valued based on the same yardsticks as other businesses: earnings, free cash flow, and, to a lesser extent, assets. Moreover, careful security analysis allows investors to find undervalued technology stocks and profits, just as with any other industry.
Investors might also avoid tech stocks because of a perceived inability to understand how they make money. Indeed, while many investors – most notably, Warren Buffett – ignore technology stocks because of their harder-to-understand business models, it’s important to note that not all technology stocks have business operations that are shrouded in complexity.
As an example, Apple has a very simple business model. The company manufactures and sells iPhones, Apple computers, and wearable devices. Moreover, one could argue that Apple’s greatest strength is not its technology, but its brand – similar to many non-technology companies like the Coca-Cola Company (KO), Procter & Gamble (PG), and Colgate-Palmolive (CL). Importantly, there are opportunities similar to Apple throughout the sector – not all technology stocks have competitive advantages that are based on microchip capacity or cloud computing speed.
The last reason why technology stocks can play an important role in your investment portfolio is that they have the potential to be very strong dividend stocks. Historically, the technology sector was devoid of any appealing dividend investments because technology firms reinvested all money to drive rapid organic growth. This is no longer the case, at least not in general. Many technology firms now pay steadily rising dividends year in and year out.
As an example, this article from CNBC describes how information technology companies have been the largest contributor to historical dividend growth over the last several years. Moreover, there are plenty of individual technology companies with very strong dividend growth rates. Two examples are:
- Apple: 10.7% 5-year dividend growth rate
- Microsoft: 12.8% 5-year dividend growth rate
The profits of these large, stable technology companies are only growing. And, many technology has reasonably low payout ratios. These factors lead us to believe that the technology sector will continue to provide strong dividend growth investment opportunities for the foreseeable future.
Final Thoughts
The technology sector has become an intriguing place to look for high-quality dividend investment opportunities.
With that said, it is not the only place to look for investment ideas.
If you’re willing to venture outside of the technology sector, the following databases contain some of the most high-quality dividend stocks around:
- The Dividend Aristocrats List: Dividend stocks with 25+ years of consecutive dividend increases
- The Dividend Achievers List: Dividend stocks with 10+ years of consecutive dividend increases
- The Dividend Kings List: Dividend stocks with 50+ years of consecutive dividend increases
- The Blue Chip Stocks List: Dividend stocks with 3%+ dividend yields and 100+ year operating histories
