Investing

Dividend Watch: Which Tech Player Will Have the Best Dividend? (INTC, MSFT, MXIM, ISIL, MCHP, DLR)

Intel Corporation (NASDAQ: INTC) was already one of the highest dividend yields in the technology sector.  Intel just again raised its dividend for the second time over the last six months.  This latest hike was a 16% increase to $0.21 per quarter or $0.84 on an annualized basis.

When Intel raised its dividend back in November of 2010, it was by 15%. This will have some ramifications for other chip stocks which have a high payout as well.  Dividends are generally not lowered, so a new dividend hike today is meant to be a signal that Intel will be able to both afford all of its future capital spending needs and will be able to have enough gross income left over to pay this dividend and even to repurchase shares of its common stock for the foreseeable future.

Even after a more than 2% gain to $23.50 today, Intel’s new dividend yield will jump up to 3.55% on an annualized basis.  We want to compare this dividend today to that of Microsoft Corporation (NASDAQ: MSFT), Maxim Integrated Products Inc. (NASDAQ: MXIM), Intersil Corporation (NASDAQ: ISIL), Microchip Technology Inc. (NASDAQ: MCHP), and even for Digital Realty Trust Inc. (NYSE: DLR).

Microsoft Corporation (NASDAQ: MSFT) currently pays 2.50%.  With the $8.5 billion cash acquisition of Skype, we would not be looking for a massive hike to its payout.  We also now believe that Microsoft may choose to make acquisitions rather than to opt for that rumored huge one-time dividend.

Maxim Integrated Products Inc. (NASDAQ: MXIM) has a dividend yield of 3.00% dividend yield, Intersil Corporation (NASDAQ: ISIL) pays a 3.1% dividend yield, and Microchip Technology Inc. (NASDAQ: MCHP) pays a 3.4% dividend yield. These were all higher yields in prior reference but that is because shares have appreciated after earnings season now.

Xilinx Inc. (NASDAQ: XLNX) already took its $0.16 per share per quarter dividend up to $0.19 per share per quarter.  The annualized payout comes to $0.76 and shares have risen to $35.75 since its dividend hike reaction when shares trading at $32.10.  That yield then was 2.35% but now it is only about 2.1%.

Perhaps the best of the best dividend is in technology’s landlord of the cloud and the internet.  This is seen in the real-estate investment trust of Digital Realty Trust Inc. (NYSE: DLR).  The REIT is far from a chip company but it is a meant to represent a pure-play on renting office space to software, information technology, real technology, and data center companies.  Its yield at the most recent $0.68 per quarter or $2.72 per year would be about 4.45% based upon a $61.00 share price.  When we highlighted this REIT in mid-February, the share price was around $55.80.

JON C. OGG

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