Tech stock dividends: It's a thing, now
It used to be that investors were wary of tech stocks that initiated dividends, wondering why the capital wasn't being used for capital growth. Now, this mentality is changing, with Microsoft yielding 2.7 percent and Intel paying over 3 percent.
It used to be that investors were wary of tech stocks that initiated dividends, wondering why the capital wasn't being used for capital growth. Now, this mentality is changing, with Microsoft yielding 2.7 percent and Intel paying over 3 percent.
In the past, investors have looked at tech stocks that initiate dividends suspiciously, the thought process being "what's wrong with this company that they have no ideas to use this capital for growth?"
And typically, there's been a punitive effect on dividend payers in techland in the form of PE multiple compression - again, the question was "why would anyone want a value tech stock when there's so much potential growth elsewhere in the sector?"
But this has changed over the years, Microsoft is yielding 2.7% these days and Intel is paying over 3% to shareholders - this is part admission that both businesses are mature and part shareholder-friendliness.聽 And over the last decade, the shareholder bases of these companies has changed over from growth/momentum investors to value guys.聽 The circle of life.
Moodys looks at the relatively new phenomenon of technology stock dividends in a new report (via MarketWatch):
The analysts note that tech dividends will still lag far behind other industry groups in the aggregate and that there will still be holdouts like Google and eBay.聽 But the world of dividend investing has gotten a bit broader and the potential for dividend growth in the XLK names is a pretty exciting thing to think about.