Until recently, investors owned technology stocks for their growth. Now investors are still buying growth in technology but they are can also get solid dividends. Some of the dividends are more than impressive. It is no secret that investors love dividends. Some dividends are needed for retirement income, but it should be kept in mind that dividends account for up to half of all shareholder returns over time.
24/7 Wall St. conducted a fresh review of the top dividends from America’s largest companies, and there were 25 companies that yielded 3.5% and more. This yield represents what is officially more than one full percentage point higher than the average yield of the S&P and Dow, and it was over 100 basis points higher than a blend of long-term Treasury bonds. Because of that history of lower dividends, it almost felt surprising that four of the top technology stocks with large market capitalizations were on the list.
The big difference between the Treasury yields and equity yields is that the former are locked in place, and most buyers of Treasury notes and bonds are not buying them with major long-term capital gains in mind. Companies are expected to grow in size and raise their dividends over time. That is particularly true of the major technology companies. Investors assume today that revenue and earnings growth, followed by dividend growth, in future years will translate to higher share prices in the years ahead.
At the start of the last week in June, the average yield was 2.37% in the S&P 500 Index and the average yield of the 30 Dow stocks was 2.43%. The yield of the 10-year Treasury note was last seen at just 2.13% and the yield on the 30-year Treasury bond was just 2.70%. These tech giants have dividend yields that blow those yields away, and again the investing community expects that the technology giants should see their stock prices rise in the years ahead.
24/7 Wall St. used trading data and the consensus analyst price targets (mean as an average) from Thomson Reuters. Additional color has also been provided. Here are the top large cap technology dividends of the S&P 500 Index with potential share price appreciation ahead.
Seagate Technology PLC (NASDAQ: STX) had the highest technology dividend yield, at just over 5.9%. The company is best known for its storage devices. It operates globally and dominates in the storage devices space with rival Western Digital. Its focus is on hard drives, solid state drives and portable drives.
Seagate shares just took a serious breather of over 6% on concerns that NAND trends and drive buying may have peaked, but this duopoly of drive-makers has managed to surprise the critics year after year. If you have followed the cost of 1 terabyte over the past two decades, you also would have been concerned at just how these companies could keep thriving and growing. That is why the old disk-drive makers have already branched out into many other segments around storage and memory.
At $39.75 a share after a recent 6% drop, Seagate had a pre-drop average target price of about $46, and its 52-week trading range is $20.77 to $50.96. Seagate has a market cap of just about $12 billion, half that of its rival Western Digital.