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TheStreet Open House

3 Top Tech Dividend Stocks for 2012

Stocks in this article: MSFT INTC CY AAPL DELL CSCO

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Intel

Market cap: $138.13 billion

Share price: $27.45

The no. 1 chip maker earns its place on this list by paying out one of the most generous dividends in Silicon Valley.

"On the purer tech side, Intel's a good choice," noted Charles King, principal analyst at Pund-IT, in an email to TheStreet, pointing to the company's impressive dividend yield of 3.06%. For comparison, the average dividend yield in the S&P is 2.04%.

Last month, the Santa Clara, Calif.-based firm raised its quarterly dividend by 7% to 22.5 cents a share, Intel's third dividend increase in 18 months. Since instituting its share buyback program in 1990 and its dividend program in 1992, Intel has returned around $112 billion to shareholders.

Clearly, Intel is keen to drive shareholder value through dividends. Moody's analyst Lane notes that while most of tech's main dividend payers have kept their payout ratio at about 20% of discretionary cash flow, Intel's dividend payout ratio exceeds 40%.

TheStreet ratings gives the semiconductor specialist an A grade and a 'buy' rating, citing its good long-term growth across cash flow, revenue and earnings per share. Intel's impressive return on capital also spells good news for investors.

Undoubtedly a best-of-breed stock, Intel's domination of the semiconductor space looks set to continue. The chip maker controlled a record 16.5% of the semi market in 2011, according to tech research firm Gartner, its twentieth consecutive year as the share leader.

Experts also predict future revenue boosts for the chip giant.

"They should be able to capitalize on a few forthcoming catalysts," explained Chris Stuart, research manager for TheStreet Ratings. "One is their Ultrabook initiative, which is their answer to Apple's MacBook Air, and also Microsoft's Windows 8."

Intel says that Ultrabooks, which are super-skinny laptops built around its processors, are already gaining momentum, predicting that the technology will breathe new life into the moribund PC market.

The company's new Ivy Bridge PC chip and its recently-launched Romley server processor are also expected to drive growth in the second half of 2012 and beyond. Consumer tech giant Apple, for example, is using Ivy Bridge within the new MacBook Pro that it launched in a blaze of publicity last week.

Intel shares have gained 13.2% this year, outpacing the Nasdaq's gain of 10.74%.

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