Conventional wisdom holds that technology stocks are not a good choice for investors interested in dividend income. If your clients want dividends, shares of Facebook, Twitter and many other tech newbies wont make the cut.
Yet technology stocks should be part of a balanced portfolio -- and many have long histories of dividend payments. The Computing-Tabulating-Recording Co. paid its first dividend on April 10, 1913 -- 11 years before it changed its name to International Business Machines. A century later, IBM had a yield of 2.1% as of Dec. 31, 2013 -- slightly above the 1.98% yield of the S&P 500 index. (Part of the reason for the higher yield was a slight decline in the share price in 2013, although IBM also boosted its dividend last year.) In large part, the idea that technology companies dont pay dividends took hold during the late 1990s. During the dot-com bubble, many tech firms shunned dividends. With their share prices climbing daily, managers and boards of these corporations saw no need to pay cash to stockholders.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access