5 Tech Stocks for Your Income Portfolio
Shas is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Out of all investment styles, income investment is one of the most popular, and there are good reasons for its popularity. Income investment focuses on stocks with high dividends. However, it would be folly to go after a stock with high dividends without paying any heed to other metrics like dividend yield ratio, dividend payout ratio and dividend growth rate. A good income portfolio makes sure that it contains stocks that fulfill all these criteria and then some more. You should also keep in mind that these metrics are generally not comparable across other industries, so while you compare the stocks, make sure that they belong to the same industry. Here is my pick of tech stocks that are good for an income portfolio:
Seagate Technology PLC (NASDAQ: STX): The hard disk drive company is based out of Ireland and offers a wide range of storage solutions to its retail and enterprise clients. While it holds leadership position in its segment, the company is faring equally well when it comes to serving its investors. The stock grew 17 percent in the past 52 weeks, and it also offered 4.73 percent dividend yield. Its dividend seems to have a secure future as the company increased its dividend four-fold in the past five years. Its robust cash flow position is also conducive to the continued payment and growth of the dividend. Seagate Technology is currently seeing a sell-off which actually may provide a good entry point for long term investors. Overall, it is a good stock for income investors.
STMicroelectronics NV (NYSE: STM): This Swiss company offers a 5 percent dividend yield, and in the past 52 weeks the stock itself grew more than 8 percent. Its upward ascent continues as STMicroelectronics gained 8.7 percent this year so far. The company specializes in semiconductor integrated circuits and is constantly augmenting its product portfolio. It is one of the leading chip makers in Europe and has a steady balance sheet, offering security for the future payments for its dividend. The company recently reported its fourth quarter results, and while its financial numbers lagged behind consensus estimates, it is likely to recover in the coming quarters.
Analog Devices (NASDAQ: ADI): The company recently paid 34 cents per share in dividends, an increase of 13.3 percent over its previous payment. With this dividend, Analog Devices’ dividend yield stands at 3 percent. Additionally, the stock grew 7.5 percent this year so far, while its previous 52 week growth stands at 13 percent. Analog Devices also has an 11 year track record of continuously raising its dividend payment. The company derives a major portion of its revenue from enterprise clientele and thus has lower exposure to the mass market, giving more stability to its revenue stream. Analog Devices was also named among the top 25 socially responsible dividend stocks. The stock is further expected to benefit from an impending recovery in the semiconductor sector. Since Analog Devices is mainly invested in the industrial segment of semiconductors, the likelihood of a recovery is stronger for this company.
Emerson Electric (NYSE: EMR): The company recently won $33 million worth of a contract to automate Statoil Platform. The continued growth ensures that the company will keep up its dividends, which currently provide a 3 percent yield. The stock has grown 6 percent this year so far, and its 52 week growth stands at 10 percent. Emerson Electric is currently in a bullish phase as its stock recently created a new 52 week high. The run is likely to continue as the company reported strong quarterly results. For its fiscal first quarter, the stock reported 5 percent higher revenue while its EPS climbed 24 percent on a YoY basis. With its robust cash flows, the company is in solid position to keep up its dividend payments. Emerson Electric recently paid 41 cents per share in dividend.
Ericsson (NASDAQ: ERIC): The Swedish company grew 21 percent this year so far and offered a 2.83 percent dividend yield to go with it, making it an attractive investment avenue. Ericsson is operational globally and provides multimedia solutions to fixed and mobile network operators. The dividend is in safe hands as it has a solid cash pile of $12 billion on its balance sheet. Its quarterly results also showed the positive side of the company as it surpassed its consensus estimates. Ericsson grew its sales 5 percent on a YoY basis and 23 percent sequentially. It also improved its margins. With robust growth prospects, the stock is likely to provide capital growth as well as good regular income in the form of dividends.
While some stocks may provide higher dividend yields, the payments may come at the cost of growth in share price, negating the benefits of choosing high dividend yielding stocks. The above list can act as a good initial point for selecting high yield and high growth stocks for your portfolio.
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