After 17 years without a dividend, Apple
The dividend plan will cost the company $45 billion over the next three years, and CEO Tim Cook said that it will likely broaden the company's shareholding basis to fund managers that only invest in dividend-paying companies. Wedgewood Partners CIO David Rolfe said, "It was high time to do this," since Apple has been holding $96.7 billion in cash largely from the iPhone and iPad sales.
After the announcement, Google is now the only tech company with a market cap over $100 billion that doesn't offer a dividend, in contrast to names like Cisco, Intel, and Microsoft. With so much success, Apple had "literally become a cash machine," in the words of Needham & Co. analyst Charlie Wolf. Steve Jobs had resisted efforts to get Apple to return cash to their investors, according to Piper Jaffray Cos. analyst Gene Munster. He said, "It would have been unheard of under Jobs' watch. This is just finance 101, but it looks like rocket science next to what they've done in the past."
Business section: Investing ideas
We decided to put together a list of tech companies that are paying dividend yields over 1%, and with a positive payout ratio under 50%. Then we checked their institutional transactions for net purchases to see what the "smart money" was doing with them. Do you think these stocks provide opportunity for both growth and income?
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
1. ASML Holding: Engages in designing, manufacturing, marketing, and servicing semiconductor processing equipment used in the fabrication of integrated circuits. Market cap at $20.30B.Dividend yield at 1.23%, payout ratio at 11.77%. Net institutional purchases in the current quarter at 17.8M shares, which represents about 4.3% of the company's float of 413.53M shares
2. Activision Blizzard
3. TIM Participacoes
4. FactSet Research Systems: Provides financial and economic information to investment community worldwide. Market cap at $4.45B.Dividend yield at 1.09%, payout ratio at 27.71%. Net institutional purchases in the current quarter at 1.8M shares, which represents about 4.33% of the company's float of 41.53M shares
5. j2 Global Communications
7. Keynote Systems: Provides Internet and mobile cloud monitoring solutions worldwide. Market cap at $341.15M.Dividend yield at 1.22%, payout ratio at 7.86%. Net institutional purchases in the current quarter at 1.1M shares, which represents about 8.12% of the company's float of 13.54M shares.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Danny Guttridge does not own any of the shares mentioned above. Institutional data sourced from Fidelity.
The Motley Fool owns shares of Intel, Cisco Systems, Google, Microsoft, Activision Blizzard, and Apple. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Intel, Activision Blizzard, Microsoft, Apple, FactSet Research Systems, and Google. Motley Fool newsletter services have recommended creating a synthetic long position in Activision Blizzard. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.
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