Investing

Grabbing For High Dividends in Tech (DLR, MXIM, ISIL, MCHP, INTC, MSFT)

Investors love dividends and they love technology stocks.  By and large it is hard to find very high dividend payout in technology.  There are several chip stocks which pay over 3% in current dividend yields but they are few and far between.  There is at least one way that technology investors can try to participate in some growth and still collect nearly 4% in income.  What about the technology landlord?  Digital Realty Trust, Inc. (NYSE: DLR) is a real estate investment trust that caters to technology companies.

The REIT pays roughly a 3.9% dividend yield.  At $55.80, its 52-week range is $47.42 to $64.17 and it has a market cap of right about $5 billion.  Throughout the recession, Digital Realty (or Digital REIT by our abbreviation) has managed to grow the dividend.  The current rate has been $0.53 per quarter.  Thomson Reuters has estimates of $3.29 looking back at 2010 and $3.85 EPS for 2011.  As a REIT, it pays out 90% of income to owners. Analysts have a consensus price target of $62.35.

The company claims to have the world’s largest wholesale data centers.  Companies range from large technology companies to financial providers who need their technology managed.  It operates more than 95 properties consisting of 16.7 million rentable square feet throughout America, Europe, and the Pacific Rim.

The higher yields out there in technology are still low compared to utilities and what used to be paid out in banks and financials before the credit crunch.  A few other technology companies with relatively high dividends are Maxim Integrated Products Inc. (NASDAQ: MXIM) with a 3.2% yield, Intersil Corporation (NASDAQ: ISIL) has a yield of roughly 3.6%, Microchip Technology Inc. (NASDAQ: MCHP) pays a dividend of roughly 3.7% and that has been increased through time.

There is income if you go much larger up the ladder as well.  Intel Corporation (NASDAQ: INTC) also generates billions in free cash and investors can reach up to get a yield of 3.3% at the current price.  Microsoft Corporation (NASDAQ: MSFT) generates billions and billions in cash and pays roughly a 2.3% yield.  Unfortunately, those investments have generated very little in long-term capital gains over the last decade.  Unfortunately, it has been a tough sell telling investors that these are income stocks.

JON C. OGG

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