INTC Cash from Operations (TTM) data by YCharts .
Consider IBM as a stronger dividend-growth candidate. Its $1.3 billion quarterly payout was less than half of its (substantial) earnings last quarter, and just one-third of its operating cash flow. Big Blue's debt level, meanwhile, is less than twice its cash on hand. The consistently improving cash production has helped the dividend double since 2010, even as the payout ratio remains below 50% of earnings .
Solid market outlook
Intel stands out in this list as a dividend tech giant with solid growth prospects. Despite weakness in the PC market, Intel's management sees an acceleration in sales gains this year thanks to healthy demand in its data center, programmable solutions, and Internet of Things divisions. Profitability is also running ahead of plan thanks to falling production costs .
Image source: Getty Images.
Unfortunately, restructuring expenses will continue to pinch short-term profits . Yet Intel appears set to emerge from its transition in fine shape to take advantage of major tech trends like cloud computing and big data.
Contrast that outlook with hard-drive giant Western Digital, whose stock has slumped by 40% in the last year as sales volume and profitability dropped. Like Frontier, WDC is hoping a major acquisition will help it right the ship, but sustainable dividend growth won't be possible until sales and earnings recover.
Finding a good value
Thanks to their relatively slow growth and spotty recent financial performance, nearly all of these tech stocks can be purchased at a discount to the broader stock market. Newly formed HP is the cheapest of the group at nine times forward earnings, while Qualcomm weighs in as the priciest, at 16 times next-year's profits. Investors are paying about 19 times forward earnings, meanwhile, for the S&P 500. All of the above stocks also pay an annual yield that's at least 50% higher than the S&P's current 2%.
Of course, the valuation and income gaps alone don't make these dividend stocks screaming buys. But they do suggest that income investors could find some solid long-term bets among mature dividend tech giants right now.
With that in mind, I'm most interested in Intel at today's prices. The chip titan's cash flow and profits seem to have stabilized and are primed for steady growth even if the PC market stays weak, which means its dividend has room to improve from its already market-thumping 3% yield.
A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .
Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Qualcomm and Verizon Communications. The Motley Fool owns shares of Western Digital. The Motley Fool recommends Cisco Systems and Intel. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
