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Let’s be honest: tech stocks are not a traditional safe haven for investors.
The technology sector has long been known as one of the most volatile sectors on the market. By nature, technology is a fickle thing. With innovation moving at such a rapid pace, what’s new and hip one day can become an outdated technology the next day. So it stands to reason that many stocks of the companies creating new technologies are constantly in flux – hot one day, cold the next.
That said, many technology companies are flush with cash these days. Five of the 10 richest companies in the world by market cap are in the technology sector. With more cash on hand than ever, many tech stocks are either introducing or increasing previously existing dividends.
Take Apple (NASDAQ: AAPL), for example. The company Steve Jobs built overtook Exxon (NYSE: XOM) earlier this year to become the richest publicly traded entity in the world. Fresh off the second-most profitable quarter by any company ever, Apple finally introduced its first dividend in March. Analysts have speculated that the move could force the hand of Google (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), eBay (NASDAQ: EBAY) and other big-name tech stocks that suddenly appear stingy for not offering their shareholders a dividend.
Apple’s new dividend wouldn’t be the only factor forcing their hand. Telecommunications stocks – some of the most prominent stocks in the tech sector – were the highest-yielding stocks in the S&P 500 in 2011, with an average yield of nearly 6%. Dividend yields among telecommunications stocks outpaced even those in the utilities and health care sectors – two sectors known for their generous yields.
Tech stocks will never be viewed as a safe haven that’s on par with those two sectors. But there are enough established, cash-heavy tech companies these days to whet the appetite of income investors seeking safe yet profitable investments.
Here are four large-cap tech stocks that pay generous dividends of 4% yield or more – and have a history of increasing their dividends annually:
- AT&T (NYSE: T): The largest telecommunications company in the U.S. currently boasts a dividend yield of nearly 5%. The yield was as high as 6% last September before the stock went on a big run this year, gaining more than 17% in 2012. But the company upped its dividend by a penny per quarter in January – something AT&T has done every year since 2008.
- Verizon Communications (NYSE: VZ): The broadband and communications giant has seen its shares skyrocket of late, rising 19% since the second week of April. Otherwise, its 4.6% dividend yield would be much higher. Still, at 50 cents a share per quarter, Verizon offers a generous dividend that has been rising rapidly in recent years. After going virtually unchanged from 2000-2007, Verizon’s dividend has been increased every year since by an average of 5% a year.
- Vodafone (NASDAQ: VOD): This British multinational wireless carrier pays a hefty 7.2% dividend. Better yet, the company has grown its dividends by an average of 11% annually over the past five years. One recent red flag, however: With year-over-year profits dwindling, Vodafone slashed its dividend by roughly 8% earlier this month.
- Rogers Communications (NYSE: RCI): One of Canada’s largest communications companies with a market cap of $19 billion, this digital cable and high-speed internet provider offers a dividend that’s exactly six times what it was in 2005. The $0.38 quarterly payment amounts to a 4.4% yield, and is a total that has increased every year since 2008. With an operating cash flow of $3.5 billion and a healthy 12.4% profit margin, Rogers appears well positioned to continue increasing its dividend in the coming years.