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TheStreet Open House

6 Undervalued Technology Stocks With High Dividends

Stocks in this article: COHUEBIXESIOGLWKLACQCOM

James Dennin, Kapitall: If Warren Buffett turns out to be wary of Twitter, what are some undervalued technology stocks he would like?

The other day I heard a string theory professor explain something that reminded me of the Twitter IPO. 

He was discussing the applications of his research, and he admitted that at the moment, no, he didn't really know yet exactly how his discoveries would impact the world in terms of genuine, marketable inventions.

[Read more on Technology from Kapitall: Warren Buffett Invests in Tech Stocks, Just Probably Not Twitter]

But then he pointed out that quantum physicists in the 1920s also wouldn't have known how their research would eventually be applied to everyday life. When you're still working out difficult concepts, it's hard to see things like the semiconductor coming along – an invention which, by some estimates, accounts for over a quarter of our nation's GDP.

A lot of time, effort, and money need to go into understanding something  before you can monetize it. But without making those kinds of investments in the first place, we wouldn't have had the radio, the computer, or the internet. 

Mind. Blown.

Investing ideas

This relates directly to the problems that many Twitter skeptics raise when they look at the company's IPO. Why would you invest in a company with no profits yet? Why would you invest in a company that will trade at over 70 times its valuation? 

Most importantly, why would you invest in something when you have no idea where the profits will be coming from next month, much less in two, three years? 

But then, when a company has a goal not to make a profit, but to permanently " democratize content" - well, how you cash in is almost an afterthought. 

For that reason, Warren Buffett probably wouldn't dig Twitter as an investment. In fact, half of all investors polled don't have an interest in the social media stock. But are there other ways to invest in science and technology, without placing a bet on a single product or goal?

As evidenced by his purchase of IBM (IBM), Buffett likes technology stocks that fit certain parameters: they have relatively low valuations, they pay dividends, and they don't keep all their eggs in one basket, so to speak.

Consider if Microsoft's (MSFT) Bing fails, there's still Office… That final point is more abstract than the rest.

However, the first two are very easy to run in a screen. We found six technology stocks trading with foward price to equity ratios (forward P/E), in this case at or below 14, that also pay high dividends.  

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