Some Tech Dividends to Peruse

 | Aug 16, 2013 | 9:30 AM EDT  | Comments
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Stock quotes in this article:

mxim

,

csco

,

mchp

,

ca

The blowup of Cisco (CSCO) brought into focus the fact that a key growth sector is really in the dumps. CEO John Chambers is probably being overly cautious, but the fact that they are laying off 5% of their workforce adds some beef to the negative story.

Cisco fits with the more general trend in tech, which is softening markets and softening earnings. I pointed out Monday that tech has suffered some of the worst estimate cuts over the course of the year.

Although growth investors might be hard-pressed to find good ideas in tech at the moment, income investors should be licking their chops. Tech is one of my favorite sectors for dividend capture, because investors generally don't own the stocks for income, Therefore, they trade "inefficiently". The stock price movement rarely acknowledges the dividend, unlike other sectors such as utilities that trade more like a saw tooth. You can buy a tech stock for the dividend and easily be out a day later if growth managers decide they want to own it.

I am loading up now on some tech names for dividend plays. There are several coming next week that you should consider if you are generating income via dividend capture. Keep in mind that I am not offering a longer-term opinion on these names. I own them strictly to capture the upcoming dividend.

Below is a table of the best tech dividends.

Tech Stock Dividends
FactSet

 

Within this list, I am playing Maxim (MXIM), Microchip (MCHP) and CA (CA), although the others are also fine. I especially like the semiconductor names -- analog players like these two are high margin cash machines with very stable trading patterns. They offer downside protection: If you are stuck in them awhile, you have fewer concerns about the business blowing up in some way on you.

Similarly, a software name like CA sports higher margins and stability. There is little "glamour" in this list -- and that is the point. For dividend capture, you want boring old names that just throw off cash and don't move around too much.

We are entering the sweet spot of the quarterly dividend capture season, with a ton of names going ex-dividend in the next week or two, so I will be back early next week with more ideas.

You should be especially active at the moment -- making hay while the sun shines. At the halfway point of August, I have already achieved my income goal for the month (1/3 of a 2% quarterly goal) -- in contrast to July, in which I barely made it, as is usual.

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