With the market finally getting some legs, worried investors sitting on the sidelines with a ton of cash may be just ready to consider some buying, and one of the sectors that Wall Street almost universally likes for 2016 is technology. As a rule, these companies are free-cash-flow cows, have little debt and many have solid growth potential.
One conundrum that remains is that due to very low yields on government debt around the world, in some cases negative, Treasury yields have been kept low here at home. Investors looking for better growth potential and solid dividends may want to look at top technology companies that pay good dividends.
We screened the Merrill Lynch research database for technology stocks that were rated Buy, and also paid at least a 3.5% dividend. We found four that look very attractive now.
This is the printer and personal computer businesses of the old Hewlett-Packard. HP Inc. (NYSE: HPQ) provides products, technologies, software, solutions and services to individual consumers and small- and medium-sized businesses, as well as to the government, health and education sectors worldwide. Its Personal Systems segment offers commercial personal computers (PCs), consumer PCs, workstations, thin client PCs, tablets, retail point-of-sale systems, calculators and other related accessories, software, support and services for the commercial and consumer markets.
The Printing segment provides consumer and commercial printer hardware, supplies, media, scanning device and software and services, as well as laserjet and enterprise, inkjet and printing, graphics, and software and web services.
HP investors receive a 4.46% dividend. The Merrill Lynch price target for the stock is $15, and the Thomson/First Call consensus estimate is$13.43. Shares closed most recently at $11.11.
This stock fell out of the limelight and could be poised for a solid comeback. Garmin Ltd. (NASDAQ: GRMN) designs, develops, manufactures, markets and distributes a range of navigation, communication and information devices worldwide. It operates through five segments: Auto, Aviation, Marine, Outdoor, and Fitness. While the growth of smartphone GPS put a crimp in the company’s business, the expansion into new products is proving successful.
The company has no debt and boasts cash of over $1 billion, or $5.50 a share. There’s some frustration that it hasn’t been more aggressive in repurchasing shares, given its strong balance sheet. That could change if activists take aim at Garmin, which is chatter that has been heard on Wall Street for years.
Garmin investors receive an outstanding 4.98% dividend. The $47 Merrill Lynch price objective is higher than the consensus estimate of $40.11. Shares closed at $40.94 on Thursday.