Consider These Under the Radar Tech Stocks

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Income investors are in a tough spot. Because of the Federal Reserve’s ongoing quantitative easing program, interest rates are at historic lows. As a result, traditional fixed income products such as bank certificates of deposit or government bonds pay little interest. Even riskier fixed income assets, such as corporate bonds, have rallied considerably and now provide yields that are nothing to write home about.

Consequently, many income investors have turned to equities as sources of yield. Surprisingly, the technology sector has become something of a haven for income investors. While the mega-cap technology giants are indeed paying solid dividend yields, there are smaller tech companies that pay generous dividends to shareholders as well. Here’s a few to get you started.

Small companies, but big dividends

Microchip Technology (NASDAQ: MCHP) is a $7 billion semiconductor company. Microchip has a solid dividend track record, increasing its shareholder payout every year since 2002. Recently, the company has inched its dividend upward every quarter. Microchip offers a solid payout, as its last four quarterly distributions add up to a 3.7% yield.

Microchip’s dividend is backed up by its underlying fundamentals. The company recently reported record net sales of $1.582 billion on a GAAP basis.

Maxim Integrated Products (NASDAQ: MXIM) is a $9 billion company that operates in the semiconductor industry, and engages in designing and developing integrated circuits worldwide. The company carries a well-capitalized balance sheet, with more than $1.5 billion in cash on the books and a reasonable long-term debt to equity ratio of 30%.

In addition, the company has more than enough liquidity to meet its short-term obligations, as evidenced by its 3.30 current ratio. This means that the company has $3 in current assets for every $1 in current liabilities.

Maxim offers its investors a healthy dividend in addition to its rock-solid balance sheet. The company pays a 3% dividend and raised its dividend 9% late last year.

Molex (NASDAQ: MOLX) carries a market capitalization of $5 billion and a dividend yield north of 3%. Molex designs and manufactures electronic components.

Molex recently released a decent third-quarter earnings report, showing that net revenue increased 2% year-over-year. The company also announced a 9% dividend increase, bringing the payout to its new level of $0.96 per share, meaning the stock offers investors a hefty 3.2% yield at recent prices.

Molex has done a good job of increasing its shareholder payout in recent years. The company’s dividend is more than double what it was five years ago.

The bottom line

Investors who prefer to receive solid income from their investments need to broaden their horizons in order to produce meaningful yield. Bonds aren’t paying much, and as a result, equities may be the place to be. In that vein, while it may surprise some investors, technology stocks are actually among the market’s best dividend payers.

While you could consider the blue-chip technology juggernauts you’ve undoubtedly read about, there are a few hidden dividend payers within the technology sector that may be worth further consideration. These stocks provide solid dividend yields that compare favorably to what the broader market offers investors in terms of yield. Moreover, each of these stocks carries a market capitalization less than $10 billion, meaning they may have further room to run than their gigantic technology peers. As a result, these tech stocks just might give your portfolio the unbeatable combination of compelling capital gains in addition to dividend income.

Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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