Build Diversity: Part 6 Tech & Telcoms

28 Mar 2014 00:32
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All stock information will be culled from David Fish’s “Dividend Champions List” at which provides a list of all stocks that have continually grown their annual dividend payouts for 5 years or more in a row.

Welcome to Part 6 of our “Build Diversity” series. Today we will be looking at the Technology and Telcom sectors.

To start with a list we will use basic search criteria of:

  • min div yield near 3% or greater
  • payout ratio near 65% or less
  • debt to equity ratio less than 1
Company Symbol Yrs of Div Growth Div Yield Payout Ratio TTM P/E Debt/Equity
Analog Devices Inc. ADI 12 2.91% 67.27% 23.10 0.18
Intel Corp. INTC 10 3.63% 47.87% 13.17 0.23
Microsoft Corp. MSFT 11 2.92% 41.33% 14.14 0.27
AT&T Inc. T 30 5.76% 54.12% 9.40 0.82
China Mobile Limited CHL 8 4.71% 42.63% 9.06 0.00

The search yielded 5 stocks. For Technology companies payout ratios of MSFT & INTC are below 50% and the largest dividend payout is INTC.

For Telcom, both results offer high dividend yields and low P/E ratios. Of the two, only T has a dividend ratio above 50% but even at this level there is still room to grow the dividend but T also has the longest consecutive annual dividend growth at 30 years.

Looking at average dividend growth rates we see higher rates of growth for lower yielding technologies and low growth rates for the more mature high yielding telecommunication stocks.

Company Symbol 1 Yr DGR 3 Yr DGR 5 Yr DGR 10 Yr DGR
Analog Devices Inc. ADI 13.3% 16.5% 11.8% 42.3%
Intel Corp. INTC 3.4% 12.6% 10.5% 27.4%
Microsoft Corp. MSFT 16.9% 20.8% 16.1% 15.0%
AT&T Inc. T 2.3% 2.3% 2.4% 4.9%
China Mobile Limited CHL 2.8% 6.6% 6.8% 21.9%

One stock to note is INTC which lists a 1 year dividend growth rate of 3.4%. INTC has not increased their divided since 2012 and if they do not increase their dividend in the next two quarters they will lose their status of consecutive years of dividend growth.

Our quick search has yielded 5 potentially attractive examples to add to your portfolio. Like any investment you should research further before purchasing any equity as this report is nothing more than a result of some surface level values and ratios.

Analog Devices Inc. (ADI): Analog Devices, Inc. is engaged in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits (ICs) for use in industrial, automotive, consumer, and communication markets worldwide. It offers signal processing products that convert, condition, and process real-world phenomena, such as temperature, pressure, sound, light, speed, and motion into electrical signals.

Intel Corp. (INTC): Intel Corporation designs, manufactures, and sells integrated digital technology platforms worldwide. It operates through PC Client Group, Data Center Group, Other Intel Architecture, Software and Services, and All Other segments.

Microsoft Corp. (MSFT): Microsoft Corporation develops, licenses, and supports software, services, and hardware devices.

AT&T Corp. (T): AT&T Inc. provides telecommunications services to consumers and businesses in the United States and internationally.

China Mobile Limited (CHL): China Mobile Limited, an investment holding company, provides mobile telecommunications and related services primarily in Mainland China and Hong Kong.

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