The breathtaking run in technology stocks has dominated the financial headlines this year since the massive February and March selloff. In fact, the 10 biggest stocks in the S&P 500 from a market capitalization standpoint, which include the gigantic technology leaders, now represent a stunning 29% of the index. The Nasdaq is up over 25% and has set over 32 records this year.
Many strategists across Wall Street have become concerned over market concentration, and while from a valuation perspective it is nowhere near the absurd levels of the dot-com era, from a market concentration perspective it could be a bubble, with the Nasdaq five (Facebook, Apple, Amazon, Microsoft and Google) representing nearly 25% of the S&P 500.
For nervous technology investors that want to stay in the sector, a move to the dividend-paying legacy leaders might be a great idea now. We screened our 24/7 Wall St. research database looking for Buy ratings on some of the oldest and most reliable tech companies.
This is a mega cap tech leader for more conservative accounts to consider. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.
It provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
Cisco’s cybersecurity products give clients the scope, scale and capabilities to keep up with the complexity and volume of threats. Putting security above everything helps corporations innovate while keeping their assets safe.
The company reported in-line revenues for the quarter, but the disappointing guidance caused some sellers to come in. Many on Wall Street remain positive as 5G, 400G, optical and WiFi 6 are expected to drive 2021 growth.
Holders of Cisco Systems stock receive a 3.41% dividend. BofA Securities has its target price set at $52, which compares with the Wall Street consensus target of $48.81 and Monday’s close at $42.18 per share.
This legacy leader in semiconductors has continued working hard to focus more on Internet of Things and data center cloud spending. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide. Its chief executive was one of the highest paid last year.
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 stock has taken a hit recently due to concerns over 7 nanometer chips, but now the company has announced that it has encountered issues with its upcoming 7 nanometer process that will result in delays for the next generation of chips, too. Many remain positive about Intel’s upcoming Tiger Lake series, which some feel will beat AMD in single-thread performance while being competitive in multithread, despite having half the number of cores.
Shareholders receive a 2.68% dividend. The Credit Suisse price target is a giant $70, well above the $55 consensus target. Intel stock ended Monday at $49.14 a share.