Tech stocks aren’t traditionally the first place to look for dividend income. That’s because technology companies generally reinvest earnings to grow their businesses. Yet this year, the information technology sector became the biggest source of dividend payments in the Standard & Poor’s 500 index.
Tech contributed 14.6 percent of the total dollar amount of dividends paid, surpassing consumer staples stocks, the biggest contributor in 2011. This year consumer staples stocks, such as Procter & Gamble and Coca-Cola, paid 14.1 percent of the total.
A big reason for tech’s climb is Apple’s dividend. In August, the world’s most valuable company began sharing its wealth for the first time in two decades. Apple now pays out nearly $10 billion annually.
Other big tech stocks have initiated dividends in recent years, such as Cisco and Oracle. Even so, the average yield of tech stocks is a relatively paltry 1.7 percent – next to last among the sectors of the S&P 500. Telecom services stocks pay the highest average yield of 4.8 percent.
Still, several tech stocks pay rich dividends. But be cautious that the yield isn’t high because the stock price has declined. Income investors may want to consider the yields of CA Inc., 4.5%; Intel, 4.3%; Microchip Technology, 4.3%; Microsoft 3.4%; Dell 3.1%; and Cisco, 2.8%.Associated Press