Skip to main content
number cruncher

What are we looking for?

Sustainable dividends from blue-chip tech stocks, carrying less risk.

The screen

We may see some technology stocks continue to fall this year from their 2021 highs, but the well-established among them have fared much better than the sector’s money-losing initial public offerings and startups.

The share-price gains of those blue-chip techs reflect, in part, the value investors place on dividends backed by profits.

We think successful investors gain most from buying and holding companies – including tech stocks – that have maintained or raised their dividends during both economic and stock market downturns.

With this search, we’re looking for established tech firms: those with strong business prospects, but that have also maintained or increased their dividends since the pandemic hit in early 2020.

We will then apply our TSI Dividend Sustainability Rating System to home in on the top dividend payers. Our system awards points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow to cover dividends;
  • One point if the company’s an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Established technology companies offering sustainable dividends

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. (US$ Bil.)1Y Ttl. Rtn. (%) Recent Price (US$)
1Apple Inc.AAPL-QHighest110.52,773.630.3166.23
2Microsoft Corp.MSFT-QHighest100.82,272.340.5303.33
3Cisco Systems Inc.CSCO-QAbove Average92.5251.930.358.90
4IBM Corp.IBM-NAbove Average85.0119.22.3131.58
5Intel Corp.INTC-QAbove Average82.6222.7-7.353.62
6Texas InstrumentsTXN-QAbove Average82.6168.32.8178.30
7Nvidia Corp.NVDA-QAbove Average80.1647.692.5250.67
8Qualcomm Inc.QCOM-QAbove Average71.6200.35.8172.47

Source: Dividend Advisor.

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

Our TSI Dividend Sustainability Rating System generated eight stocks.

Texas Instruments Inc., headquartered in Dallas, sells chips and electronic products worldwide. San Diego-based Qualcomm Inc. focuses on chips and software for wireless devices. Networking giant Cisco Systems Inc., based in San Jose, Calif., sells hardware, software and more. Armonk, N.Y.-based International Business Machines Corp. is one of the world’s largest computer companies, with operations in more than 175 countries. Intel Corp. is one of the world’s biggest makers of chips for PCs and servers, while Nvidia Corp. leads in graphics and multimedia chips; both are headquartered in Santa Clara, Calif.

Two tech behemoths top our sustainable dividend ranking. Cupertino, Calif.-based iPhone maker Apple Inc. earlier this month became the first public company to reach – briefly – a market cap of US$3-trillion. And Microsoft Corp., headquartered in Redmond, Wash., is the world’s largest software provider. Granted, along with Nvidia, the yields for Apple and Microsoft are meagre even if you factor in their significant share-price gains over the past year. But we see their commitment to paying dividends as a marker of their continuing financial strength and investment value.

We advise investors to do additional research on any investments we identify here.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.