Impressed that Microsoft boosted its dividend? Don't be. You can do better with other tech stocks in the S&P 500.
Eleven S&P 500 stocks — including HP, Cisco Systems and IBM — each yield more than any other S&P 500 information-technology stock, including Microsoft.
And that's the case even after Microsoft, the AI and software giant, announced Tuesday it upped its quarterly dividend by 10% to 83 cents a share. But that's a yield of just 0.76% — still a pittance compared with some of the other big-cap tech stocks' dividends.
Sizing Up Tech Dividends
Tech stocks are known for being stingy with dividends. And for the most part they are.
Only a little more than half the S&P 500 stocks in the information-technology sector pay a dividend. And most of them are smallish. The average dividend yield in the sector is just 0.82%. And Microsoft's new dividend yield is still less than that. Compare tech's dividend with the utility sector's average 3% yield.
But you can still find some healthy yields in tech.
Some Big Tech Dividends
Computing giant HP is famous for its Silicon Valley roots. But it's a legend with investors for its dividend.
The company yields 3.27%. That's more than any other S&P 500 technology stock. What's more, the stock is up more than 14% this year. But it's still not a fast growth story. Analysts think earnings will rise just 3% this year. And the stock's Composite Rating of 41 is middling at best.
IBM, on the other hand, is a soaring stock on top of a plump dividend. Shares are up 31% this year, giving IBM an RS Rating of 91. And Big Blue pays a 3.1% dividend, too. But analysts see its earnings growing only 5% this year and next. That's nowhere near the 12% and 16% annual profit growth Microsoft is expected to post in the next two years.
Even with dividends, it seems, you don't get something for nothing.
Highest Yielding Tech Stocks
In the S&P 500
| Company | Ticker | Yield |
|---|---|---|
| HP | HPQ | 3.27% |
| Cisco Systems | CSCO | 3.14 |
| IBM | IBM | 3.08 |
| Hewlett Packard Enterprise | HPE | 3.02 |
| Skyworks Solutions | SWKS | 2.88 |
| Seagate Technology | STX | 2.76 |
| Texas Instruments | TXN | 2.62 |
| Corning | GLW | 2.61 |
| Microchip Technology | MCHP | 2.36 |
| Juniper Networks | JNPR | 2.28 |
| Qualcomm | QCOM | 2.04 |
