It’s a tricky time for investors. Economic weakness persists with unemployment above 10% and small business bankruptcies on the rise. There are concerns that the worst effects economically haven’t been felt yet. However, the stock market is trading at all-time highs as it’s becoming increasingly optimistic that the economic recovery will continue and that the country’s health situation won’t take a turn for the worse.
During these uncertain times, investors should consider tech stocks with high dividend yields. If the economy deteriorates, these dividend payments will be more attractive as interest rates will fall. Further, these companies have reasonable valuations and diversified sources of revenue.
If the economy’s recovery continues, then it’s likely that technology will be one of the areas that will benefit. Here are four tech stocks that stand out for their exceptional dividend yield: International Business Machines Corporation (IBM), ChipMOS Technologies Inc. (IMOS), Xperi Holding Corporation (XPER), and MIND C.T.I. Limited (MNDO).
International Business Machines Corporation (IBM)
IBM operates as an integrated solutions company that provides information technology (IT) products and services worldwide. Its Cloud & Cognitive Software segment offers software for vertical and domain-specific solutions in health, financial services, and Internet of Things (IoT), and other services application areas.
The stock has been consistently paying dividends each quarter for the last six decades. In the previous five years, dividend payout for IBM grew at a CAGR of 8.3%. While the four-year average dividend yield for IBM is 4.5%, the current dividend translates to a 5.2% yield. The most recent dividend declared by the company was $1.63 for the last reporting quarter, amounting to an annual dividend of $6.52.
IBM has recently reported decent second-quarter results. The company generated a free cash flow of $2.9 billion, a 14.7% increase year-over-year. It also reported a free cash flow margin of 16%. Operating cash flow for the quarter stood $3.6 billion. Furthermore, IBM’s average cash flow over the past 5.75 years is higher than 96.46% of current dividend-paying stocks in the StockNews.com universe.
Despite the top-line declining 2% year-over-year in constant currency to $18.1 billion, the total cloud revenue was up 34% to $6.3 billion. The gross profit margin for the quarter stood 48%. IBM has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.
Moreover, the company has recently entered into a multi-year agreement with Coca-Cola European Partners (CCEP), the world’s largest Coca-Cola bottler based on revenue, to accelerate its transformation to an open hybrid cloud environment using Red Hat OpenShift and Red Hat Enterprise Linux.
IBM is currently trading 21% below its 52-week high. Additionally, the stock has gained more than 38% from its March lows.
How does IBM stack up for the POWR Ratings?
A for Trade Grade
B for Peer Grade
A for Industry Rank
B for Overall POWR Rating.
It is ranked #10 out of 28 stocks in the Technology – Hardware industry.
ChipMOS Technologies Inc. (IMOS)
IMOS is a Taiwan-based company that researches, develops, manufactures, and sells high integration and high precision integrated circuits and related assembly and testing services. It has a broad range of customers, including leading fabless semiconductor companies, integrated device manufacturers and independent semiconductor foundries.
The stock currently has a dividend yield of…
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