Dividend Stocks: 3 Top Technology Stocks for Income Investors

3 Top Technology StocksWhen it comes to dividend investing, high-yield dividend stocks are especially hard to uncover in the tech sector. It seems most tech companies would rather invest their free cash into research and development or acquisitions, or buy back their own stock than give back to investors.

But if you look hard enough, there are some gems in the tech sector that are going against the grain.

Here are three high-yielding dividend tech stocks that would be a worth a second look for an income investor’s portfolio.

1. Garmin Ltd.

Shares of Garmin Ltd. (NASDAQ:GRMN) are down about 20% over the past year, which is the reason why its dividend yield is very attractive right now at 5.06%. But that big payout comes with a bit of risk, as the company’s earnings have also declined over the past year, due to declining sales for its GPS devices. On top of that, 2016 isn’t looking too rosy either, as sales growth is expected to be flat.


So why am I recommending you take a closer look at GRMN stock?

Garmin’s non-auto device segments are looking very strong and are helping to offset the decline in its auto division. In the latest quarter, Garmin’s fitness segment grew 14% over last year and is expected to overtake auto devices as the company’s largest product segment. (Source: “Garmin Reports Q4 and Fiscal 2015 Results,” Garmin Ltd., last accessed February 29, 2016.) Garmin’s other product segments are also posting solid growth. Outdoor, aviation, and marine devices grew at six percent, 12%, and eight percent, respectively. Gross margins for the fitness segment were 51%, compared to 42% for the company’s auto division.

Altogether, non-auto devices accounted for 63% of revenue and collectively grew nine percent over last year, while auto device sales declined 21%. (Source: Ibid.)

Garmin is becoming less reliable on its auto segment, as sales from its non-auto segment are providing steady growth.

2. Digital Realty Trust, Inc.

You may not have heard of Digital Realty Trust, Inc. (NYSE:DLR), but its current market cap of $11.5 billion is no small feat. Digital Realty is not a traditional tech stock, but it is still a play on technology. The company is involved in datacenter acquisition and ownership, as well as other high-tech real estate, such as small start-ups and government bodies looking for data storage. Although it acts like a real estate investment trust (REIT), its core business is big data and cloud computing.

The company has been increasing dividends since it went public in 2004. Its dividends have increased about 430% since then, from $0.16 per share per quarter to $0.88 per share per quarter. (Source: “DLR Dividend History,” Dividend.com, last accessed February 29, 2015.)

With its current dividend yield at 4.3%, Digital Realty is a stock you might want to take a look at.

3. Cisco Systems, Inc.

Cisco Systems, Inc. (NASDAQ:CSCO) is a multinational technology giant that specializes in networking equipment. The company has a massive $60.0 billion in cash and short-term investments, so it should not have a problem being unable to pay dividends any time soon.

The company has a very sustainable business model, meaning there is not much risk for investors holding this stock. Cisco is not going anywhere, as the company is a global leader in providing infrastructure for telecom networks.

Cisco’s traditional revenue comes from IP routing and switching, but it’s also investing resources to create long-term growth. In routing for example, Cisco has developed a high-performance line of products that offer unprecedented capacity compared to the company’s older products. This segment has grown more than 100% in the last two quarters of 2015. (Source: “4 Reasons Cisco Stock Is Perfect for Dividend Investors,” InvestorPlace, November 11, 2015.)

Cisco only began to issue a dividend about four years ago, but since that time, the company has more than tripled its quarterly dividend from $0.06 per share to $0.21 a share. The stock is very attractive with a forward annual dividend yield of 3.91%.