NEW YORK ( TheStreet) -- With Dell (DELL - Get Report) becoming the latest tech giant to perform an about-turn in its dividend strategy, tech sector dividends are once again in the investor spotlight.
The no. 2 PC maker may have grabbed most of the
headlines when it announced plans for a quarterly payment of 8 cents per share last week, but experts say that
(MSFT - Get Report),
(INTC - Get Report) and
(CY - Get Report) are the key tech dividend stocks.
Ratings agency Moody's cites Microsoft as the tech dividend leader after making more than $5.7 billion in dividend payments in 2011, although Apple (AAPL - Get Report) is expected to surpass the software giant after reinstating its dividend following a 17-year hiatus. The iPhone maker plans to institute its quarterly payment sometime in its fiscal fourth quarter, which begins on July 1, 2012.
Dell (DELL - Get Report) and Apple (AAPL - Get Report), of course, are just the two latest tech firms rethinking their dividends. Cisco (CSCO - Get Report), initiated its first-ever cash dividend in 2011, as did Lexmark (LXK) and Intuit (INTU). Hard drive maker Seagate (STX) also reinstated its dividend in 2011.Doug Freedman, an analyst at RBC Capital Markets, says that the popularity of dividends reflects the growing maturity of many U.S. tech companies. "The growth in their business is not consuming all of their cash now," he told TheStreet. "In the old days, they were growing so fast that they needed every dollar they could get their hands on to grow their business." The trend is seen as still gaining momentum as well.
"Dividend payments by rated U.S. technology companies will rise again in 2012," explained Moody's analyst Richard Lane in a recent note. Moody's expects that these companies' dividend payments will approach $26 billion in 2012, up 14.3% from 2011. In addition to traditional tech stocks, investors looking for strong dividend plays should also consider telecom giants AT&T (T) and Verizon (VZ), which both offer impressive yields. Read on for more details on tech's top 3 dividend stocks:
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