For some retirees, technology is a no-go area due to the volatile nature of the industry and the inability to generate cash flows in the form of dividends.
But the COVID-19 pandemic has proven that some exposure to this vital part of our economy is important, even for those investing for retirement. When lockdown, curfew, and stay-at-home orders negatively impacted traditional businesses' revenues, tech companies thrived as they offered connectivity and services that kept modern life going.
That said, you will also find less volatile and more mature technology companies that pay growing dividends every year and fit well into any retirement portfolio. Let's take a look at three stocks that are a good thing for long-term retirees investments.
1. Microsoft
For retirees, one of the most important factors to consider when choosing a stock is the company's ability to pay dividends in both good and bad times. to turn. Microsoft (NASDAQ 🙂 ticks both boxes.
The stock has proven itself over the years to be an excellent investment for conservative as well as growth-oriented investors. Over the past 10 years, Microsoft's dividend per share has grown by 14.30% per year. With an annual dividend yield of just under 1%, Microsoft pays a quarterly dividend of $ 0.56 per share.
That return may seem meager to many investors, but don't forget that Microsoft is still growing, while also offering great upside potential. Including dividend payments, Microsoft has achieved a total return of 333% over the past five years.
Going forward, there is a good chance that this Washington-based company will continue to increase its payout as the growth momentum continues. During the pandemic, demand for cloud computing services, video games and computers increased, enabling the company to make huge profits.
When you retire, find companies like Microsoft to keep in your wallet. These are the giants who have the power to defend their business and pay you for the rest of your life.
2. Apple
Many investors consider Apple Inc (NASDAQ 🙂 to be a technology stock with little attractive income. But the maker of iPhones is one of the most cash-rich companies in the world, which has been helping to please income-seeking investors for years.
Don't be disappointed by Apple's current small 0.68% dividend yield. Apple offers a powerful combination to increase overall returns for its investors in the form of rising dividends and a large-scale share buyback plan. Apple increased its dividend by nearly 10% or more in the past six years, except in fiscal 2020, when it increased its payout by 6%. Apple currently pays out a dividend of $ 0.2 per quarter.
Apple generated $ 3.28 in earnings per share for fiscal year 2020. With a payout of $ 0.82 on an annual basis, this was 25% of its revenue, showing that there is plenty of room to increase its dividend each year .
While Apple increased its dividend, it also bought back its shares. With $ 196 billion in cash in hand, Apple is in an enviable position to further expand its share buyback program to support its stock.
Share buybacks are another way of rewarding long-term investors. As a company repurchases its shares, there will be fewer shares outstanding and a greater portion of the profits will be distributed to a smaller number of shareholders.
3. Texas Instruments
Another attractive option for retirees in the technology space is Texas Instruments Incorporated (NASDAQ :), a technology giant that produces electronic products, including chips used in many different industries .
Texas Instruments derives most of its sales from industrial equipment manufacturers. It also manufactures semiconductors that can be used in everything from vehicles to home electronics and aerospace hardware.
But the biggest draw for long-term investors is the company's dividend program, which grows every year. With an annual dividend yield of 2.32%, TI currently pays $ 1.08 per share per quarter, which has grown 23% per year for the past five years.
With a payout ratio of just over 60%, TI is in a comfortable position to increase its dividend going forward. In addition, the company's long-term growth prospects are favorable with the amount of electronics added to cars and machinery.
