Old-School Tech Stocks Warming Up for Summer: 4 Dividend Payers to Buy

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It’s almost funny that technology stocks that have been around for years, and have been in and out of favor, are old enough to now be classified as “old school.” Funny or not, that’s indeed the case, and like all good companies, many of them are revamping and restructuring some of their business lines to compete with a host of new companies.

Solid results from one of the old schoolers late last week surprised the Wall Street pundits, and they were driven by some positive results in newer business lines. We decided to screen the Merrill Lynch technology research universe for old-school tech stocks rated Buy that also pay dividends. We found four that look pretty attractive now.

Applied Materials

This semiconductor capital equipment leader has lagged the overall tech market over the past year, but its shares have bounced smartly off lows printed in February and back in December. Applied Materials Inc. (NASDAQ: AMAT) is actually now finally trading above all the moving averages, and for patient investors may be a high-quality pick now.

The company is the global leader in precision materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries. Applied Material’s technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world.

The company posted solid results last week that beat expectations and it raised guidance going forward. Merrill Lynch noted that the company’s core business improved from improving semiconductor capital equipment spending. The firm also cited an increase in organic light-emitting diode (OLED) adoption by companies like Apple as a positive.

Many on Wall Street think that films companies like Applied Materials will benefit from the new Intel and Micron Technology 3D XPoint (which is pronounced 3D cross-point) technology, which is an entirely new class of nonvolatile memory that can help turn immense amounts of data into valuable information in real time.

Applied Materials investors receive a 1.77% dividend. Merrill Lynch boosted its price target to $25. The Thomson/First Call consensus target is $25.28. Shares closed Friday at $22.66.


Intel

This leader in semiconductors is working hard to scale away from dependence on personal computers. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide. The company’s platforms are used in various computing applications comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.

The company also provides communication and connectivity offerings, such as baseband processors, radio frequency transceivers and power management integrated circuits, and tablet, phone and Internet of Things solutions, which include multimode 4G LTE modems, Bluetooth technology and GPS receivers, software solutions and interoperability tests, as well as home gateway and set-top box components.

Intel announced a massive restructuring recently, which also included a large number of layoffs. The company is moving away from its slow-growth businesses and will be using the cash saved to expand its high-growth businesses of data center, Internet of Things and memory, all transformational revenue silos that the Merrill Lynch team is bullish on.

The company reported an inline first quarter, and lowered the forward outlook. Merrill Lynch stays positive on the company and believes there is solid upside potential for the stock. Some analysts think the restructuring can ultimately translate to 0.23 in annual earnings-per-share savings.

Investors receive a 3.44% dividend. Merrill Lynch has a $36 price target. The consensus target is $35.20. Shares closed on Friday at $30.15.