Has the Time for Tech Dividends Arrived?

The problem with tech stocks is that few have a "wide-moat". Many are subject to rapid technology obsolescence, which causes them to re-invest most of their earnings back into the business just so they could maintain their share in the market. Most large cap tech stocks have hoarded billions of dollars in cash on the balance sheets, which sits idly or is used to overpay for companies with strategic patents in bidding wars for tech dominance.Given all of the above, it is not at all surprising that few technology stocks have traditionally paid dividends. After the burst of the dot-com bubble however, many tech companies have started to pay dividends to their investors, many of which are probably still sitting on large unrealized losses. Examples of that include Microsoft (MSFT), Qualcomm (QCOM) and Oracle (ORCL). Cisco Systems (CSCO) is the latest large-cap name in the technology sector to announce their intent to pay a dividend by July 2011. Typically, companies that initiate a dividend tend to perform well over the months after the first payment. For Cisco investors, this small dividend would provide some return on their investment, which has been mostly flat since 2002. Whether Cisco will be able to grow the dividend is yet to be seen however.... Read more