6 Well-Established Tech Companies That Need to Start Paying Dividends in 2016

Technology

Published: January 26, 2016 1:45 pm

Last Updated: January 13, 2020 2:33 pm

When it comes to returning capital to shareholders, dividends are generally considered the yardstick showing a company’s belief in sustainable earnings for years into the future. Investors know that dividends in income stocks now account for a large portion of total returns through time. The reminder that the bull market was interrupted ahead of its seventh anniversary is another issue. Investors seem to want the higher quality stocks, or at least those with predictable earnings and with solid dividends.

So what about the companies that could easily pay dividends but simply refuse to do so? 24/7 Wall St. has identified six solid technology companies that are deemed to have a safe earnings floor but that are choosing to use cash in other methods on behalf of their shareholders. These should be considered the dividend sinners, or dividend misers, even if they are great tech giants. This is also not meant to bash a stock’s performance — some have in fact been quite stellar.

The market has pulled back in 2016 and it seems that this is a good time for investors to reflect on which companies are treating their shareholders the best. Investors generally have done well historically by investing in growth and technology, and they have done well by investing in dividend stocks. They can invest in technology and growth and get handsome dividends, now that one-sixth of the Dow Jones Industrial Average is dividend paying tech stocks.

24/7 Wall St. has written about many companies in recent years that needed to start paying a dividend. Some of them have started to do just that, including Amgen, Apple, Cisco, EMC, Gilead, Nasdaq, Teradyne and more. It seems more than likely that the so-called dividend aristocrats, those companies that have hiked their dividends for 25 years in a row, could eventually be full of technology stocks.

In normal investing terms, it seems fitting to call companies that could easily pay a dividend but refuse to do so by the name dividend sinners or misers. As of the start of 2016, there were fewer than 80 members of the S&P 500 that do not pay dividends. It was just two or three years ago that the figure was closer to 100 companies of the S&P 500.