6 Cheap Technology Stocks Paying Cold, Hard Cash

Editor's note: A previous version of this article listed Partner Communications as paying a dividend, when it recently announced that the dividend would be suspended. The Fool regrets the error.

As the markets whipsawed up and down last week, investors panicked about what to do with their investments. Should they sell before things get worse, or take advantage of opportunities that might be out there? It's a tough call to make sometimes. The best advice I can give is to stay the course of your investing strategy, whatever it is that may be.

However, if you have some cash to invest, now is a great time to pick up some really awesome dividend stocks at dirt cheap prices. Companies that pay dividends have illustrated that over time, they have outperformed their non-paying brethren. In addition, these same companies tend to be more conservative and more focused on rewarding their shareholders by consistently shelling out those lucrative dividend payments. So if you can take advantage of a time like right now, when the market is already down 10% over the last three months, you might be able to find that hidden gem you've been looking for.

To help you on your quest, I ran a screen for technology companies paying dividends above 2%, with P/E ratios less than 17, that are trading at least 15% below their 12-month high, and that have garnered the respect of our CAPS investing community with at least a four or five-star rating. I've ranked and ordered the results below by the top six highest dividend payers.

Company

Dividend Yield

P/E Ratio

% Below 12-month High

CAPS Rating (out of 5)

Telecom Argentina (NYSE: TEO  ) 9.6% 14.5 15.4% *****
CenturyLink (NYSE: CTL  ) 8.4% 14.7 26.2% ****
France Telecom (NYSE: FTE  ) 7.8% 7.6 24.5% ****
United Microelectronics (NYSE: UMC  ) 7.6% 11.8 46.0% ****
Vodafone (Nasdaq: VOD  ) 7.1% 11.2 17.2% *****
City Telecom H.K. (Nasdaq: CTEL  ) 7.1% 13.7 36.5% ****

Source: Motley Fool CAPS, as of Aug. 15.

Granted, there are probably some good reasons why some of these stocks are trading so cheaply and have fallen from grace. If you notice one thing from the list above, it's that five out of the six companies are telecom related, which should almost come as no surprise. Telecoms typically pay out high dividends and can be counted on to keep those dividends stable. However, decreasing average revenues per user, or ARPU, have plagued many of these stocks, and accordingly, they've taken a nose dive as of late. UMC, on the other hand, has seen its shares plummet after reporting a 39% drop in net profit from a year ago, surprising many analysts who had estimated much higher profits. Revenue also fell 5.4%, so neither the top nor bottom line were up to par last quarter.

Nonetheless, these stocks are paying absolutely phenomenal dividends and they are trading extremely cheap, so if you've got interest in them, it would pay to do your own due diligence and look into them further.

Seeking out other dividend stocks that could help boost your portfolio? Check out my colleague's brand new free article, "U.S. Downgrade Be Damned: Here's What I'm Buying Now."

Jordan DiPietro owns no shares. Motley Fool newsletter services have recommended buying shares of France Telecom, and Vodafone Group. 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.


Read/Post Comments (4) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 16, 2011, at 2:30 PM, garbin wrote:

    I thought PTNR stopped paying dividends. Am I reading the wrong reports?

  • Report this Comment On August 16, 2011, at 3:40 PM, TMFPhillyDot wrote:

    @garbin,

    You are correct; the mistake should be fixed shortly. Thanks much.

    Foolishly,

    Jordan (TMFPhillyDot)

  • Report this Comment On August 16, 2011, at 6:07 PM, Fool wrote:

    I've also been looking at Vodafone. Believe the current dividend is $1.41/share, which translates to a yield of only 5.1%.

    Could you confirm this as well?

  • Report this Comment On August 17, 2011, at 11:01 AM, financeguy85 wrote:

    Good names and all, but by "technology" stocks did you mean telecom?

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