Should You Invest in Technology Stocks?
Believe it or not, tech investing doesn’t have to raise your blood pressure. Forget what you think you know about the “best technology stocks,” because there are plenty of other options. For instance, there are high-dividend technology stocks for long-term investors.
I’ll freely admit that these tech companies aren’t the sexiest stocks on the market. They won’t make for riveting cocktail party conversations, but at least they’re relatively safe and you can expect from them a steady stream of income.
That’s what counts in my world: a solid return. If you don’t like having a minor panic attack every time you open your trading account, long-term dividend technology stocks are probably right for you. It’s nice to know that there’s a payout every three months.
My point is that not every tech stock has to be super risky, nor do they have to provoke gut-wrenching panic every time the market takes a dive. If we’ve learnt anything from the last decade, it’s that financial shocks are as inevitable as the sunrise. For better or worse, we all live under the black cloud of economic change.
The trick is learning to invest in this climate of fear and anxiety.
If you have a gambler’s mentality, my warnings may fall on deaf ears. But if you’re averse to risk, then pay attention. Adjust your thinking. You’re not a venture capitalist (VC) in Silicon Valley. The best technology stocks for you are miles apart from what VCs look for, meaning that you should be looking for different things.
For instance, they don’t care if nine out of 10 of their stocks go under. All they need is one giant score to compensate for the losers. By contrast, risk-averse investors are supposed to hold a set of stable, income-generating stocks that don’t need much active management.
To that end, I compiled a list of the top three high-dividend technology stocks.
1. High-Dividend Technology Stocks: Verizon Communications Inc. Yields 4.2%
Verizon Communications Inc. (NYSE:VZ) is one of the tech stocks for long-term investors to consider. It is an absolute behemoth of a company that employs over 162,000 people across the United States, yet most analysts don’t think of it as a pure technology company. That’s why they call it a “telecommunications company,” as if telephones are somehow unrelated to technology.
The implication is that Verizon can’t be compared with younger tech superstars like Netflix, Inc. (NASDAQ:NFLX). Never mind that their businesses overlap. Analysts and investors are willing to brush that fact aside because Verizon delivers those services through traditional cable. Somehow that disqualifies from being a technology stock.
I think that’s a bunch of malarkey.
Look at Verizon’s recent acquisition history: AOL, Inc. (NYSE:AOL) and Yahoo! Inc. (NASDAQ:YHOO); that tells you everything you need to know. Verizon now owns two of the biggest tech/media players in the world, which means they can compete with the likes of Google (Alphabet Inc.) and Facebook Inc. for advertising dollars. It’s an enormous opportunity for them.
The two purchases ran VZ shareholders a hefty bill of $9.2 billion, but the purchases were most certainly worth the expense. Without them, Verizon risked being left behind as customers “cut the cord” and moved toward online services like Netflix. At least now there is a way to ensure that VZ stays on the list of high-dividend technology stocks.
VZ stock has paid regular dividends for 49 straight quarters, with 10 dividend hikes along the way. That kind of record is hard to find in the tech sector. Right now, VZ stock comes with a 4.2% annual dividend, but there’s every reason to believe that it will keep rising.
Some analysts were concerned about the dividend when 40,000 employees went on strike this year, but the quarterly payout came like clockwork. Verizon has paid dividends through financial crises and economic upheavals. It’s an absolute stalwart.
So ignore the bias toward young, trendy companies like Netflix. Don’t get me wrong, I love NFLX stock. It’s an absolute beast for top-line growth and its business model is something to be marvelled at. I have always been a fan of Netflix stock.
But that doesn’t mean it’s for everyone. If you’re planning for retirement or looking for a relatively safe investment, then Netflix is going to feel like a roller coaster ride. For anyone wanting a smooth journey, Verizon stock may be the ticket you’re looking for.
I should also add that VZ is more than just a high-dividend technology stock. It’s actually capable of capital gains, which should be obvious from the 16% year-to-date spike.
2. High-dividend Technology Stocks: AT&T Inc. Yields 4.46%
Verizon’s longtime nemesis, AT&T Inc. (NYSE:T), also makes my list for best technology stocks for long-term investors. Like its rival, AT&T is a high-dividend technology stock with deep, entrenched roots in American life. It is a household name that does business in all 50 states and it employs 277,000 Americans.
AT&T has paid out dividends for 65 straight quarters, with an annual dividend hike every year since 2001. And we’re not talking about a puny dividend either; the company pays a 4.46% annual dividend, but that’s not all. AT&T stock also returned an impressive 27% in capital gains over the last 12 months, vastly outperforming the S&P 500 index’s 3.96% return. In other words, the total return on AT&T stock would have been sevenfold higher than that of the stock market. That’s what I call winning.
But can this stock continue to perform over the next 10, 15, or even 20 years?
Short answer: yes. AT&T is a company that traces its origins back to Alexander Graham Bell himself; the father of the telephone, the godfather of American ingenuity. This company is a cornerstone of America, and its managers are upholding that legacy by making incredible investments to keep AT&T ahead of the curve.
For instance, AT&T invested heavily into a program called “GigaPower”. The end goal of this multi-billion-dollar program is to boost Internet speeds by laying fiber-optic cables under America’s biggest cities. They’ve already started offering service in dozens of cities, which suggests that they’ll cover the entire map within a few years.
GigaPower enables customers to download 25 songs in one second, an episode of your favorite TV show in less than four seconds, or a high-definition movie in less than 34 seconds.
That’s the power of fiber-optics. AT&T is effectively rebuilding America’s Internet infrastructure and no one has even noticed. Add that to the 4.46% yield, and I think it’s fairly obvious why AT&T stock is one of the best technology stocks on the market.
3. High-dividend Technology Stocks: Vodafone Group Plc Yields 4.95%
The third company on my list of best technology stocks is Vodafone Group Plc (ADR) (NASDAQ:VOD), a mobile operator from across the pond. It’s basically a British version of AT&T and Verizon, except that it operates in 26 different countries. Vodafone has a 4.95% yield, not to mention a 16-year record of paying dividends, regardless of the state of the economy.
Judging by the constant stream of biannual dividend payments, providing mobile networks is a pretty sweet business. There’s very little competition once you own the actual cell towers. Subscribers will inevitably flock to you when you’re the only show in town, so it’s no wonder that Vodafone can afford dividends, come hell or high water.
Vodafone dominates in Europe, South Africa, and India. Considering India’s monster-sized mobile phone market, I’d say that Vodafone is ideally positioned for growth in the sector. But even without that growth, it’s trading on the cheap right now.
The share price plunged after Britain voted to leave the European Union (E.U.). It was a surprise outcome that left many U.K. businesses reeling, but investors didn’t stick around to see the reaction. They bailed on U.K.-related investments with gusto, leaving behind a weakened VOD stock. That being said, I don’t think people are going to stop using cellphones in Europe, South Africa, or India just because of “Brexit.”
Vodafone’s still going to bring home the bacon; therefore, it remains as one of the best high-dividend technology stocks. Its stock price will in all likelihood rebound over the long term and, in the meantime, shareholders can collect a hefty payout twice a year.
That sounds like a good deal to me. If you’re risk-averse, I suggest you take a closer look at these tech stocks for long-term investors. But if you’re looking for something a little more adventurous, I have a Free Special Report which is perfect for you. It’s about a stunning new technology which we have identified as the next big thing. This technology has already attracted billions of dollars in funding from the biggest companies in the world, and what’s more, it could mint new millionaires overnight.