Don't overlook these tech dividend stocks

Yes, you heard correctly. Contrary to popular belief, not all technology stocks are growth stocks.

By InvestorPlace Aug 31, 2012 9:46AM

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CorbisBy James Brumley

 

Investing can be a tricky game sometimes. Sure, from the outside looking in, all the clichés and tips seem simple enough: Buy the rumor and sell the news. The greater the risk, the greater the reward. Buy low and sell high. And, of course, there's no free lunch on Wall Street.

 

Funny thing about those assumptions, though, is that while they may be true nine times out of 10, it's that one time out of 10 that can hurt you.

 

One common assumption that nags at me from time to time is the assumption that all tech stocks are growth stocks and not a place where an income investor would want to park any money. Sure, it may be true for a lot of technology names, but have you taken a really close look at the payouts on some of the large -- yet unloved -- technology companies?

 

Consider these tech stocks with surprisingly decent (and growing) yields.

 

Lexmark

Even for investors who are familiar with technology stocks that pay dividends, printer-maker Lexmark (LXK) is an unfamiliar name. That's because the company started to pay out some of its cash flow only late last year, beginning with a 25-cent payment in November.

 

And in spite of fiscal struggles that have prompted its exit from the inkjet-printer business, the company has remained faithful to its new dividend promise, paying 25 cents in March and then upping the rate to 30 cents per share for the May and August payments.

 

For those of you keeping score, that's $1.10 worth of payout for a $21 stock, pushing the yield well above 5%.

 

Microchip Technology 

This next one doesn't quite top that yield, but Microchip Technology (MCHP) still boasts one that sits just above 4%. And considering it hasn't missed or lowered any quarterly payments since at least 2002, you have to admit it's a pretty impressive feat. Plenty of large-cap companies that were designed specifically to pay and grow dividends haven't been as reliable.

 

To be fair, the quarterly dividend payment growth has stalled a bit since 2008. It reached 34 cents per share late that year and is at only 35 cents now. That slowdown may have been a deliberate decision in front of the earnings slowdown witnessed over the prior six quarters.

 

The trend is already showing signs of reversing, though, with Microchip Technology looking for year-over-year earnings comps to start rising again this quarter. The catalyst? The industry's best serial SRAMs and a new digital-to-analog (display) converter, which may even mean the beginning of renewed dividend growth.

 

That's not all when it comes to overlooked tech dividend stocks, though. You can read the full list here.

 

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

 

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