Dividends Spread to Tech Sector

Tuesday, 04 Dec 2012 08:50 AM

By Dan Weil

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Technology stocks are the new darling for dividend-seeking investors.

The tech sector now represents the biggest dividend payer in the Standard & Poor’s 500 Index, with more than 40 of the 71 tech stocks in the index now sporting dividends.

Some of the most storied tech names pay dividends, including Apple, Microsoft, IBM, Intel and Cisco.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

Dividends are a natural part of the aging process for many successful companies. “A lot of tech companies are grappling with maturity,” Josh Peters, a dividend stock analyst at Morningstar, tells Moneynews.

“Microsoft and Cisco won’t be 20 to 30 percent growth stories anymore. They realize it’s not just growth but total return for shareholders, so they’re stepping up to the plate with dividends.”

Many of the tech dividend payers are among the safest stocks in the market.

"There's a very high level of confidence you can take, especially in the large-cap companies," Laton Spahr, a manager of Columbia Dividend Opportunity fund, tells The Wall Street Journal.

"Their ability to move more and more of their cash flow to dividends has been a stable story." He compares IBM, which has boosted its dividend for 17 consecutive years, to Procter & Gamble, one of the dividend kings.

But don’t confine yourself to just tech stocks for dividends. You want a broadly diversified portfolio, Michael Sheldon, chief market strategist at RDM Financial Group, tells Moneynews.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

© 2014 Moneynews. All rights reserved.

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