Although technology stocks aren’t usually known for their dividend prowess, several companies in this space pay above-average yields. In this article, we’ll draw your attention to three promising technology plays with good dividend upside.
All three companies on this list are established technology companies representing services, hardware and semiconductors.
- IBM Corp (IBM)
- KLA Corporation (KLAC)
- Lenovo Group (LNVG)
- Market Cap: $125.7 billion
- Dividend Yield: 4.57%
A company like IBM needs no introduction. The Dow blue-chip yields 4.57%, which is more than four times the technology-sector average. IBM has grown its dividend payments in each of the past 19 years, making it a staple of many income portfolios.
For its most recent quarter, IBM reported better than expected earnings and on-par revenue results. Although revenues have declined for four straight quarters, cloud sales continued to grow. Investors are expecting big things from the company since the acquisition of Red Hat in July.
IBM’s stock has seen its fair share of volatility, but has returned a solid 25% year-to-date.
- Market Cap: $24.8 billion
- Dividend Yield: 1.91%
The election of President Trump in 2016 was a boon for stocks, but not every industry benefited equally. Semiconductors have been among the hardest hit over strained U.S.-China relations. That being said, KLA Corporation is one semiconductor stock income investors should watch.
The stock yields 1.91%, which is higher than the technology-sector average and the benchmark 10-year U.S. Treasury note. The California-based semiconductor company has reported solid earnings results and is expected to be among the top revenue growers over the next few years.
KLA’s success is well reflected in the stock price. KLAC has surged 71% year-to-date, far exceeding the technology-sector average.
- Market Cap: $8.21 billion
- Dividend Yield: 5.14%
Lenovo has emerged as the world’s largest PC maker, taking 18% of the total market share. The manufacturer of high-quality business laptops and PCs is a leader in China, which has helped offset slowing hardware sales in other markets.
During its most recent quarter, Lenovo boasted a dividend yield of 5.14%, which is well above the tech-sector average. The company posted strong fiscal 2019 results, with full-year revenue climbing 12.5% to a record-breaking US$51 billion.
Lenovo trades on the Hong Kong Stock Exchange but can also be bought in over-the-counter markets under the symbol LNVGY,
Information technology is the S&P 500’s best-performing sector this year. Adding a couple of dividend growers isn’t a bad idea. The aforementioned companies provide a good combination of solid growth prospects, international exposure and blue-chip status.
Disclaimer: Author holds no investment position in IBM, KLA Corporation or Lenovo at the time of writing.