Legacy tech firms are worth a look.
Technology stocks captivate investors lured by the growth potential. Everyone wants to own the next Facebook (ticker: FB) or Amazon.com (AMZN), two stocks that have surged 600 percent and 450 percent respectively in the last five years. But income-oriented investors have different goals. While tech stocks offer big upside potential, they also can be volatile. Plus, many tech companies reinvest heavily and don’t pay a penny in dividends. However, a number of legacy technology names are mature businesses. Though their fastest growth is behind them, they remain attractive for investors seeking dividends and stability. Here are nine mature tech firms worth a look in low-risk, income-oriented portfolios.
Hewlett Packard Enterprise Co. (HPE)
The HP brand has been around for roughly five decades and is an icon among technology companies. In 2015, Hewlett Packard split into two companies — one that sells printers and laptops to consumers, and HPE, which sells technology solutions to businesses. Its bread-and-butter business is data storage in physical servers and cloud-based solutions. As a heavyweight in this space, HPE can support a reliable dividend. The dividend has steadily increased from 5.5 cents in 2016 to 7.5 cents currently. That’s a 36 percent increase in payouts — and doesn’t count a big special dividend payable in July.
Current yield: 2.6 percent
Cisco Systems (CSCO)
Cisco is another stock with deep roots in Silicon Valley. There is still some life left in this comparatively old company, and it has been on a great run to gain about 30 percent in the last year. Often considered a low-risk business services play, Cisco has a reliable business and equally reliable dividend. CSCO also has a massive stockpile of more than $40 billion in cash. The firm also just increased its stock buyback program by a massive $25 billion. That makes this tech giant a pretty safe bet. The recent growth in share price is icing on the cake.
Current yield: 3 percent
Intel Corp. (INTC)
Intel is one of the oldest and most respected chip makers on the planet, and is regularly in first or second place in global market share. While the trend to mobile devices threatened revenue from its popular semiconductors for personal computers and laptops, Intel has made a successful transformation not by chasing mobile, but by becoming a big player in big data. This transition has helped stabilize the company and led to nice growth. And since Intel’s roots are as a consistent dividend payer, the benefits have been passed on to shareholders with a recent increase in the dividend from 27.25 to 30 cents.
Current yield: 2.3 percent
Texas Instruments (TXN)
Another big chip maker, TXN has a unique niche in its analog semiconductors and a huge patent library to give it long-term durability in a marketplace where tech stocks tend to rise and fall based on their latest product. But don’t think Texas Instruments isn’t growing; revenue should jump about 7 percent this fiscal year as earnings are forecast to grow by an even more impressive 25 percent. Stability and reliability are key components of any good dividend stock, but they’re not always easy to find in the tech sector. That makes Texas instruments worth a look.
Current yield: 2.4 percent
Automatic Data Processing (ADP)
Automatic Data Processing provides human resources software to businesses. The work that’s done by ADP is increasingly in demand in a growing economy. But for income investors, growth is not the big appeal. Rather, the fact that ADP’s services become integrated into companies means there is steady revenue from the licensing fees its customers pay to process payrolls and run other essential tasks. This adds up to a dividend that continues to grow every year — 43 consecutive years to be exact, as of a recent increase at the end of 2017.
Current yield: 2.2 percent
International Business Machines Corp. (IBM)
Big Blue has had its troubles, in large part from disappointing guidance after its Q1 earnings report in April. However, it’s worth noting that the company beat on both the top and the bottom line — and posted positive revenue growth for the second consecutive quarter. Income investors can take comfort in the fact that IBM shares have traded in a pretty reliable pricing band for the last year or two, even if they are currently at the bottom of that range, and that its dividend is one of the safest on Wall Street with 22 consecutive years of increases in payouts.
Current yield: 3.8 percent
United Microelectronics Corp. (UMC)
This Taiwan semiconductor company has reliable revenue thanks to a secular growth trend fueling its business: end product demand growth. This is a fancy phrase for people buying gadgets in higher numbers and means suppliers like UMC have to ramp up their capacity in Asia, where the vast majority of those electronics are made. Unless you think that for some strange reason that the booming middle class in China is set to stumble or the U.S. economy is going to depend less on electronics, then there aren’t many safer bets out there than UMC.
Current yield: 3.1 percent
Seagate Technology (STX)
Seagate is one of the leaders in hard disk drive technology and memory solutions. Despite long-term growth challenges, the firm’s dominant position in this still-important slice of the tech sector has led to consistent sales and profits. STX beat both earnings and sales forecasts yet again in its recent earnings report. And while the stock has softened in the last few weeks thanks to broader market volatility, STX is still up almost 30 percent in the last 12 months to handily outperform the Standard & Poor’s 500 index. Not bad, considering its dividend is more than twice that of the typical stock in the large-cap index.
Current yield: 4.5 percent
Xerox Corp. (XRX)
Yes, that Xerox — the one best known among most Americans for copying machines that are a bit of an anachronism in the 21st century office. However, paper use isn’t completely dead and Xerox multifunction machines connected to corporate networks incorporate other useful aspects, such as scanning to a PDF and emailing from the device, as well as cloud storage software and solutions for documents. Admittedly, this isn’t enough to turn XRX into a growth stock. However, the imaging giant is doing just fine with modest year-over-year earnings growth that fuels a robust dividend.
Current yield: 3.3 percent
More from U.S. News
The Top 10 Investment Portfolio for Millennials
7 of the Best Stocks to Buy for 2018
20 Awesome Dividend Stocks for Guaranteed Income
9 Mature Tech Stocks to Buy for Dividends originally appeared on usnews.com
