Tech Dividend Stocks: Seagate (STX)
Dividend yield: 3.5%
Since the March 2009 lows, Seagate (STX) is up a phenomenal 1,500%. But investors shouldn’t think the party is over in this hard drive stock.
A lot of Seagate’s rise was thanks to a shift in sentiment. All the talk about a post-PC age weighed on shares, as did supply chain disruptions from the 2011 tsunami in the Pacific. But Seagate put up the numbers and has seen STX stock power higher and prove the bears wrong at every turn.
It’s also important to note that the dividend payments have proven naysayers wrong, too. While Seagate canceled its payouts during the financial crisis, it not only reinstated its dividend but brought payments back at an even higher rate. In fact, at the beginning of 2003 Seagate was paying just 3 cents per share each quarter in payouts; it now boasts 43-cent dividends for an increase of 1,330%.
Looking forward, STX spent more than $1.1 billion in R&D expenditures last year, and that research has been a big driver of both new products and better operations over the last few years. Case in point: Its most recent line of drives store 480 hours (20 days) of HD video, making them ideal for surveillance and security applications.
Furthermore, despite the huge run-up, Seagate still sports a forward price-to-earnings ratio of less than 9. And despite a 3.5% dividend yield and the massive increase in dividends over the last decade, payouts are quite sustainable at about one-third of current earnings.