Markets

3 Tech Dividend Payers On The Rise

The identity of the sector in the S&P 500 with the fastest dividend growth may come as a surprise to a lot of investors...

Information systems.

Dividends were once anathema to the tech industry, as the standard was to plow back profits and cash flow back into R&D. Credit Intel (Nasdaq: INTC ) and Microsoft (Nasdaq: MSFT ) , two of the biggest tech names of the time, for turning the tide on dividend payments. Intel was actually well ahead of the game, starting up its dividend payout in 1993, while "Mr. Softy" initiated its dividend in 2003.

Where are we today? The 32 dividend-paying IT stocks in the S&P 500 in 2010 yielded 0.94%. That figure grew to 1.13% among the index's 44 dividend payers at the end of 2013 . Of course, Apple (Nasdaq: AAPL ) , the second-biggest payer in terms of dollars (after Exxon Mobil (NYSE: XOM ) ), helped boost the number, but others like Cisco (Nasdaq: CSCO ) are helping to move the needle, too.

Microsoft and Intel may be the current rock stars for long-term tech dividend investors, but what about the rising stars of the industry? I'm looking for investments you can buy and hold for perhaps a decade or so in comfort... but might've slipped under your radar screen.

Here are three stars to hold in your dividend income basket for the long term:

Qualcomm (Nasdaq: QCOM )

A maker of integrated circuits and systems software, Qualcom is in the business of digital communications -- and as a leading chip provider in the mobile devices and wireless world, QCOM is at the forefront of a huge, growing market. (In fact, last year, I wrote that QCOMbelongs in any discussion that includes the term "blue chip," and my StreetAuthority colleagues also notedQCOM'sdividend growth .)

For proof of Qualcomm's muscle, consider that a list of its clients reads like a who's who in the mobile space, including Apple, Samsung and Google (Nasdaq: GOOG ) . QCOM also has the financial chops to provide investors with dividend payments and increases for the long term. As you can see by the chart below, all systems that feed dividends are a go -- and with analysts projecting a five-year growth rate of 15%, QCOM is poised for dividend growth, too.

Dividend Initiated

March 2003 (Seagate (Nasdaq: STX )

Don't think that because the world is going to mobile and smaller devices that hard drive disks will go the way of the dinosaur. HDD's are critical from mainframes down to laptops, and Seagate, along with Western Digital, rules the sector. (In fact, as recently profiled by my colleague Marshall Hargrave, Seagate's 55 million hard drives shipped in the first quarter this year represented 40% of the total market.)

Seagate features a huge lineup of products, including data storage devices and services, one of the fastest-growing segments in the industry. Seagate spends over billion per year on R&D to keep its edge in products, and they are always looking to expand, one reason it spent 4 million ( million in cash) on data storage technology provider Xyratex (Nasdaq: XRTX ) .

Other than a stumble in 2011, when STX was affected by restructuring charges and floods in Thailand that slowed production, Seagate is a solid earnings machine, and just as importantly, a cash-flow machine. With an expected 8.8% growth rate forecast for the next five years, STX is an excellent long-term dividend candidate.

Dividend Initiated

February 2003 (Oracle (NYSE: ORCL )

Oracle is the clear newcomer to the party, having finally submitted to shareholders all but begging the enterprise software and computer hardware and services giant to share some of their profitable largesse.

But better late than never, and investors looking for what I would consider potentially the longest-lasting player in the new dividend-paying bunch would be well advised to get in now. Consider the chart below, which shows Oracle has the wherewithal to increase substantially increase dividends at virtually any time, given its massive cash flow and cash on hand positions.

Indeed, if Oracle management doesn't come out of the box with its first dividend raise of at least double digits, expect shareholders to stage a revolt. Sure, year-over-year growth between 2012 and 2013 was nearly flat, and a 10.5% five-year growth target of 10.5% is a bit conservative. And yes, the enterprise and cloud space grows more crowded by the day, but this one is too hard to pass by. Oracle should become a very long-term holding for income investors.

Dividend Initiated:

October 2013 (

Qualcomm (Nasdaq: QCOM )

A maker of integrated circuits and systems software, Qualcom is in the business of digital communications -- and as a leading chip provider in the mobile devices and wireless world, QCOM is at the forefront of a huge, growing market. (In fact, last year, I wrote that QCOMbelongs in any discussion that includes the term "blue chip," and my StreetAuthority colleagues also notedQCOM'sdividend growth .)

For proof of Qualcomm's muscle, consider that a list of its clients reads like a who's who in the mobile space, including Apple, Samsung and Google (Nasdaq: GOOG ) . QCOM also has the financial chops to provide investors with dividend payments and increases for the long term. As you can see by the chart below, all systems that feed dividends are a go -- and with analysts projecting a five-year growth rate of 15%, QCOM is poised for dividend growth, too.

Dividend Initiated

March 2003 ($0.05 a share)

Most Recent Dividend

$0.42 (19% compound growth rate)

Most Recent Dividend Increase

March 2014, 20%

Most Recent Dividend

Qualcomm (Nasdaq: QCOM )

A maker of integrated circuits and systems software, Qualcom is in the business of digital communications -- and as a leading chip provider in the mobile devices and wireless world, QCOM is at the forefront of a huge, growing market. (In fact, last year, I wrote that QCOMbelongs in any discussion that includes the term "blue chip," and my StreetAuthority colleagues also notedQCOM'sdividend growth .)

For proof of Qualcomm's muscle, consider that a list of its clients reads like a who's who in the mobile space, including Apple, Samsung and Google (Nasdaq: GOOG ) . QCOM also has the financial chops to provide investors with dividend payments and increases for the long term. As you can see by the chart below, all systems that feed dividends are a go -- and with analysts projecting a five-year growth rate of 15%, QCOM is poised for dividend growth, too.

Dividend Initiated

March 2003 ($0.05 a share)

Most Recent Dividend

$0.42 (19% compound growth rate)

Most Recent Dividend Increase

March 2014, 20%

Most Recent Dividend Increase

March 2014, 20%

Seagate (Nasdaq: STX )

Don't think that because the world is going to mobile and smaller devices that hard drive disks will go the way of the dinosaur. HDD's are critical from mainframes down to laptops, and Seagate, along with Western Digital, rules the sector. (In fact, as recently profiled by my colleague Marshall Hargrave, Seagate's 55 million hard drives shipped in the first quarter this year represented 40% of the total market.)

Seagate features a huge lineup of products, including data storage devices and services, one of the fastest-growing segments in the industry. Seagate spends over $1 billion per year on R&D to keep its edge in products, and they are always looking to expand, one reason it spent $374 million ($80 million in cash) on data storage technology provider Xyratex (Nasdaq: XRTX ) .

Other than a stumble in 2011, when STX was affected by restructuring charges and floods in Thailand that slowed production, Seagate is a solid earnings machine, and just as importantly, a cash-flow machine. With an expected 8.8% growth rate forecast for the next five years, STX is an excellent long-term dividend candidate.

Dividend Initiated

February 2003 ($0.03 a share)

Most Recent Dividend

$0.43 a share (28% compound growth rate)

Most Recent Dividend Raise

August 2013, 13%

Most Recent Dividend

Qualcomm (Nasdaq: QCOM )

A maker of integrated circuits and systems software, Qualcom is in the business of digital communications -- and as a leading chip provider in the mobile devices and wireless world, QCOM is at the forefront of a huge, growing market. (In fact, last year, I wrote that QCOMbelongs in any discussion that includes the term "blue chip," and my StreetAuthority colleagues also notedQCOM'sdividend growth .)

For proof of Qualcomm's muscle, consider that a list of its clients reads like a who's who in the mobile space, including Apple, Samsung and Google (Nasdaq: GOOG ) . QCOM also has the financial chops to provide investors with dividend payments and increases for the long term. As you can see by the chart below, all systems that feed dividends are a go -- and with analysts projecting a five-year growth rate of 15%, QCOM is poised for dividend growth, too.

Dividend Initiated

March 2003 ($0.05 a share)

Most Recent Dividend

$0.42 (19% compound growth rate)

Most Recent Dividend Increase

March 2014, 20%

Most Recent Dividend

Qualcomm (Nasdaq: QCOM )

A maker of integrated circuits and systems software, Qualcom is in the business of digital communications -- and as a leading chip provider in the mobile devices and wireless world, QCOM is at the forefront of a huge, growing market. (In fact, last year, I wrote that QCOMbelongs in any discussion that includes the term "blue chip," and my StreetAuthority colleagues also notedQCOM'sdividend growth .)

For proof of Qualcomm's muscle, consider that a list of its clients reads like a who's who in the mobile space, including Apple, Samsung and Google (Nasdaq: GOOG ) . QCOM also has the financial chops to provide investors with dividend payments and increases for the long term. As you can see by the chart below, all systems that feed dividends are a go -- and with analysts projecting a five-year growth rate of 15%, QCOM is poised for dividend growth, too.

Dividend Initiated

March 2003 ($0.05 a share)

Most Recent Dividend

$0.42 (19% compound growth rate)

Most Recent Dividend Increase

March 2014, 20%

Most Recent Dividend Increase

March 2014, 20%

Seagate (Nasdaq: STX )

Don't think that because the world is going to mobile and smaller devices that hard drive disks will go the way of the dinosaur. HDD's are critical from mainframes down to laptops, and Seagate, along with Western Digital, rules the sector. (In fact, as recently profiled by my colleague Marshall Hargrave, Seagate's 55 million hard drives shipped in the first quarter this year represented 40% of the total market.)

Seagate features a huge lineup of products, including data storage devices and services, one of the fastest-growing segments in the industry. Seagate spends over $1 billion per year on R&D to keep its edge in products, and they are always looking to expand, one reason it spent $374 million ($80 million in cash) on data storage technology provider Xyratex (Nasdaq: XRTX ) .

Other than a stumble in 2011, when STX was affected by restructuring charges and floods in Thailand that slowed production, Seagate is a solid earnings machine, and just as importantly, a cash-flow machine. With an expected 8.8% growth rate forecast for the next five years, STX is an excellent long-term dividend candidate.

Dividend Initiated

February 2003 ($0.03 a share)

Most Recent Dividend

$0.43 a share (28% compound growth rate)

Most Recent Dividend Raise

August 2013, 13%

Most Recent Dividend Raise

August 2013, 13%

Oracle (NYSE: ORCL )

Oracle is the clear newcomer to the party, having finally submitted to shareholders all but begging the enterprise software and computer hardware and services giant to share some of their profitable largesse.

But better late than never, and investors looking for what I would consider potentially the longest-lasting player in the new dividend-paying bunch would be well advised to get in now. Consider the chart below, which shows Oracle has the wherewithal to increase substantially increase dividends at virtually any time, given its massive cash flow and cash on hand positions.

Indeed, if Oracle management doesn't come out of the box with its first dividend raise of at least double digits, expect shareholders to stage a revolt. Sure, year-over-year growth between 2012 and 2013 was nearly flat, and a 10.5% five-year growth target of 10.5% is a bit conservative. And yes, the enterprise and cloud space grows more crowded by the day, but this one is too hard to pass by. Oracle should become a very long-term holding for income investors.

Dividend Initiated:

October 2013 ($0.12 a share)

Risks to Consider: QCOM competes with chip behemoth Intel in a market that may be headed toward saturation, and Seagate is in a market (PCs) that continues to shrink. Oracle's competition consists of every industry heavyweight imaginable, including Microsoft, IBM (NYSE: IBM ) and even Amazon.com (Nasdaq: AMZN ) as it moves aggressively into cloud computing. However, for the most part, technology and market changes are gradual, and I don't expect any catastrophic dislocations to hit these companies anytime soon.

Action to Take --> For income investors, decisions on investing in dividend companies are more about continued future payouts and just as importantly, dividend increases. If yield on cost is a critical point in your analysis, buy any of these stocks on short-term dips, even from today's prices. Otherwise, there's no time like the present to get started.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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