Which Tech Stocks Make Good Long Term Investments?

The point of this post is quite simple. Iā€™d like to know which stock(s) you think would make a great addition to my own portfolio from a sector in which I hold none. As many of you already know, I currently do not hold any stocks in the energy nor tech sector. Of course, this was all done by design but today I am open to considering adding a tech sector holding to my long term dividend growth portfolio. Iā€™d like to share some potential picks, in no particular order, that I have in the space but would welcome any other suggestions, including tech stocks that offer high growth but pay no current dividend. My choices can be seen below.

 

SymbolDescriptionYieldPayout Ratio
CSCOCisco Systems, Inc.3.82%54.31%
QCOMQUALCOMM, Inc.4.39%82.76%
ORCLOracle Corporation1.56%28.96%
AAPLApple Inc.1.60%26.50%
INTCIntel Corporation3.11%40.17%
IBMIBM4.29%47.42%
MSFTMicrosoft Corporation2.15%56.46%

 

Clearly, most of these choices would make great long term additions to any DGI portfolio. These stocks still offer the prospect of continuing long term growth and have decent dividend yields that all appear to be sustainable with room for future growth too. Which tech stock(s) do you currently like and/or already own. I welcome all suggestions below.

 

Disclosure: Long NONE

48 thoughts on “Which Tech Stocks Make Good Long Term Investments?

  1. My choices would be Apple and Cisco. I am long both of those companies. My next choice would be Microsoft, but it would have to be purchased at an attractive valuation in order to make sense.

    • Hi NM,

      Appreciate the input. I know that most, if not all my picks, are strong tech candidates for a long term dividend growth portfolio but may not be selling at the best prices currently. I’ll be keeping an eye on these names for a potential buy down the road. Thank you for commenting.

  2. Hi DivHut,

    I’m curious why you’re considering tech stocks – what changed your mind?

    I own QCOM, INTC and MSFT from your list – QCOM has troubles currently with Apple and it’s also acquiring NXP. I picked QCOM because of LTE / Snapdragon and it’s well positioned for the Internet of Things if that ever materializes. Intel and Microsoft are both quite diverse in their business which is definitely a factor to consider.

    I consider ADP to be a tech stock too in my portfolio although I believe officially they’re industrial. There could be similar companies e.g. SAP worth looking into.

    Google, Amazon, Tesla and Nvidia are likely too overvalued to meet your criteria but they’re some of the usual tech suspects.

    Otherwise, if you’re not too inspired by technology companies and just want some exposure to the sector in case of growth, you could consider a low-cost tech ETF e.g. VGT and just take the average performance of the sector. Dividend yield is low at 1.2%.

    Best wishes,
    -DL
    Dividend Life recently posted…Saving money on insuranceMy Profile

    • Hi DL,

      I was never against tech stocks, nor energy stocks for that matter. I have owned RHT in the past as well as many energy stocks like CVX, KMP, EPD, APU and others. Just looking at my portfolio I decided that I would like some tech exposure for the long run. The question for me is which stock as there are quite a few solid dividend payers in the space as well as some non-dividend payers that I wouldn’t mind owning. Not sure when I’d initiate a position though. Thank you for your broad list of companies to consider. You don’t really see SAP in many of our fellow peers’ portfolios. VGT seems like an interesting catch-all though that yield leaves a lot to be desired. Thank you for sharing your thoughts.

    • Hi dividendgeek,

      You are the second to recommend VGT. Looks like a good catch-all ETF for broad exposure but that yield doesn’t get me too excited. Thank you for commenting.

    • Hi FV,

      Thanks for sharing your recent pick up of QCOM. Seems like many are liking the tech names you mentioned as they are selling at much more attractive levels when compared to just a few months ago. I think IBM is my least favorite while MSFT might be my top pick, though not at current levels. Thank you for stopping by and commenting.

    • Hi DK,

      I think I like your picks the most. I have my eye on MSFT and QCOM. While QCOM seems attractive at current levels MSFT still seems too expensive. Of course, if I buy, I plan to make these long term holdings so it might be a good idea to simply nibble on some MSFT and slowly build up a position. Thank you for commenting.

  3. Great short-list of ideas you have there Keith! I own some AAPL, QCOM and MSFT and remain optimistic about the dividend potential of all three.

    • Hi Jay,

      So far, judging by the comments, I see that MSFT and QCOM seem to be the most popular names out there. I like MSFT the most because of its cloud play. While smaller than AWS from AMZN it is growing at a much faster clip compared to its competitors. Thank you for your input.

  4. All good companies, though you know as well as anyone how fickle tech can be. The need to CONSTANTLY be innovating, the unlikelihood that the product is something that consumers need to survive and will continue to purchase in a depression (like food or personal care products, and the shifting technological paradigms that can make an entire product line obsolete overnight make the industry a dangerous one to invest in even with a conservative mindset.

    Right now, IBM and Qualcomm are the only two companies I own in this space. IBM because they’ve shown to be able to adapt and innovate to any change in technology, and Qualcomm because they have something in every mobile device out there and their products are as close as you can get in the tech sector to an unavoidable necessity.

    Sincerely,
    ARB–Angry Retail Banker
    ARB recently posted…Is This Bank F***ing Kidding Me!?My Profile

    • Hi ARB,

      Believe me, I know how fickle tech can be which is why I am on the DGI path for about ten years with zero tech holdings. That didn’t happen by accident šŸ™‚ Your comment highlights why I stayed away from tech all these years. I love investing in the basics which is why I’m heavy consumer stocks, industrial, health with a sprinkle of utilities. QCOM seems attractive at current levels and their products are in almost every home on the planet with a mobile device. As always, I appreciate your comment.

  5. Hi DivHut,
    Here are a few suggestions for research: SWKS, FB, CRTO, FFIV, ACIA.
    The only one I own is SWKS (it’s also the only one paying a dividend). I keep an eye on the others. I’m sure FB needs no introduction – I liked the risk/reward ratio more about a month and a half ago when it was under $150 – may have missed my chance at that entry point. CRTO is a French company, stock is an ADR – not sure if you prefer to avoid ADRs. FFIV and ACIA have struggled recently, so I’m watching to see if either can turn things around. It they can, perhaps their stocks will be undervalued.
    From your list, I only own QCOM (added some shares recently), but am considering CSCO.
    Good luck with the search.
    Engineering Dividends recently posted…Portfolio Thoughts (August 2017)My Profile

    • Hi ED,

      That’s a nice list you shared. I appreciate seeing some names that are not typically found in many DGI portfolios. CRTO and ACIA are both new to me and I will most likely stick to the “well known” stocks in the tech space first. I think QCOM is pretty popular these days. I know its yield is very appealing to many dividend investors and their products are certainly ubiquitous. Thank you for stopping by and commenting.

  6. They are all high quality companies and will make a good long-term investments. However, when making a stock buy decision, after quality, valuation is what I look at next.

    Out of all the stocks you listed above, IBM, QCOM, and CSCO would be my buy choice in that order, based on valuation and yield. INTC would be the fourth. That is if I really have to buy something now. Everything else is too expensive and I would wait for a pull back.

    But if you really want to know what i think, I would not be buying any stock in the current environment that is so ripe for a big correction. Though, that’s just me as I’m in no hurry to buy anything, besides I like the prices to come to me.
    Mr. ATM recently posted…How To Know When To Sell A Stock?My Profile

    • Hi MATM,

      I agree with you that valuation has to be a consideration before making any stock purchase and with some of the tech stocks mentioned trading at pretty rich valuations I’d probably be better served waiting a bit especially since I’m looking at MSFT as one of my top picks. QCOM seems to be trading at a nice level these days though. While the market may be ripe for a correction I’m still planning on making my monthly buys. As always, I appreciate your comment.

  7. MSFT and Apple are the best choices there, but I would wait for a mini sell-off in AAPL before buying – maybe this fall. I don’t like FB. I believe at some point popularity will peak and they will need other streams.

    An even better stock to add would be V. It only goes up. Dividend will grow. It will make you rich within 20 years.

    • Hi Anonymous,

      MSFT is probably my top dividend pick among the names mentioned. I agree with you that FB can definitely peak out at some point with its ‘coolness’ and lose traction especially when a new player comes along as one usually does. One thing about FB though is that their acquisitions of other tech plays like Instagram, Oculus, WhatsApp, among others keeps them relevant even if FB itself falters one day. Thank you for sharing your thoughts.

    • Hi DP,

      I agree that the comments are interesting to read as it shows that many like the tech sector long term and tend to hold many of the same stocks. MSFT, QCOM, CSCO and AAPL seem to be the most popular names mentioned as a whole. I’d like to see better value for MSFT as its my top consideration but CSCO and QCOM seem to be trading at more acceptable levels currently. Thank you for commenting.

  8. I think you nailed the best ones in the post above. Hopefully all of these will last 50 more years in business, but you never know as tech is fairly young as an industry. Good luck. I would probably do Microsoft.

    • Hi EL,

      While tech is a new industry, you know it’s here to stay. Of course, figuring out which players will be around in the coming decades is a bit harder to predict. Like you, MSFT is my top pick though seems to be a bit expensive at current levels. Judging by the comments it seems that QCOM and/or CSCO might be better bets today. Thank you for stopping by and commenting.

  9. Those are all pretty good choices. Big Blue needs to clean up its balance sheet a little bit before I’ll nibble there, but the others are solid cash cows that should be growing their dividends for many years to come.

    TXN doesn’t get a lot of headlines, but I think it’s also worth a look.

    FB is an interesting candidate. Obviously no current dividend, but it’s just a matter of time IMO. Their cash flow is phenomenal. They can only buy so many messaging apps. They’ll start paying a dividend eventually.

    And don’t laugh, but I think STX could be a fun ride. There’s no such thing as a “safe” 8% yield, but their cash flow situation is actually pretty healthy all things considered. I’m giving it a whirl with a small speculative position initiated through a short put option.

    Welcome to the tech sector! Come on in…the water’s fine. It’s not all high-flying growth stocks with stupid P/E ratios (although there is a lot of that…)

    • Hi catfishwizard,

      Now those are some names to consider. TXN does look interesting but doesn’t seem to make an appearance in any long term dividend growth portfolio. Not that it’s a bad company or anything, it just warrants further digging šŸ™‚ As I commented above, FB does look interesting for a non-dividend play because of their acquisitions of other tech plays like Instagram, Oculus, WhatsApp, among others which keeps them relevant even if FB itself falters one day. And while I know about STX products all too well as we ran their Cheetah and Barracuda hard drives in all our servers, that 8% yield is enough to tell me to stay away. I’m investing on the conservative side and that yield looks a little too rich for me. As always, I appreciate your comment.

  10. Hi, DivHut — interesting to see you consider the Tech space. I work in the field and so I’m a fan. I’d say INTC is in the sweet spot with a solid yield and a low payout ratio. Then AAPL. The company has about $250B in cash. Much of that sits overseas but could be flowing back if the Trump administration gets their act together and declare a tax holiday. Though AAPL will probably invest most of it (buy Ford, some have suggested!?) the company could declare a special dividend. Aside from those, I like QCOM and CSCO. I also own MSFT, but perhaps that one is too expensive right now.

    All the best and really curious to see what you do!
    FerdiS recently posted…3 Dividend Increases: August 14-18, 2017My Profile

    • Hi FerdiS,

      I think it’s time for me to start considering a tech play or two for my dividend growth portfolio. As it continues to grow I want to seek further diversification into new stocks and sectors. Judging by all the comments left it seems that QCOM, CSCO, MSFT and AAPL are the more popular plays these days with many liking MSFT a lot but not at current price/value. It has been very interesting to read what others think about the sector. Clearly, tech offers many great long term options from a dividend perspective. I’ll be watching these names and may initiate a position before the year is over. It can’t hurt to nibble on some names and slowly build up a position over time especially when the market seems very fickle these days. Thank you for sharing your thoughts.

  11. Nice Table! Without a doubt IBM is looking “safest” with highest yield. Payout is 40% vs QCOM 80%. I’ve read that IBM had to hand over the codes to the Chinese intelligence to do business there.

    Apple essentially depends too much on China. Once China shuts apple down, there goes rotten apple.

    Either way, Western countries aren’t doing too well in China. Uber China sold the wing back to the Chinese. KFC spun off KFC-China and possibly turn it over, etc.

    Tech is changing. AI is coming, I don’t want to miss the boat, but it seems distant away.

    • Hi vivivanne,

      So far, I think you have the most unique comment I have read. Clearly, China is a major consideration for any tech company these days. As you mentioned many western companies have had their issues in dealing with China and how to expand. Google and Facebook are other names that come to mind. While China is not the only market in town is does present a great opportunity for many tech companies. It’s true tech is changing all the time but sometimes you can find a relative “constant” in the space. Thank you for sharing your thoughts.

  12. I am personally planning to buy Cisco shortly. I think they are undervalued at the moment and I don’t have any tech stocks in my portfolio yet. Since I am an IT engineer, I think it’s logical to have some technology stocks in my portfolio. And the bank I am working in is using Cisco products everyday – VPN Client (for remote working), Webex (for virtual meetings). I am not even mentioning other network solutions we are using in the background (I can often see boxes of Cisco equipment arriving to our office). It was widely used in my previous company as well and I don’t think that it’s going away anytime soon.
    Good luck,
    BI

    • Hi BI,

      Wow!!! I’m not the only dividend investor on the planet without a tech company in my portfolio. That’s nice to know šŸ™‚ I agree that these days CSCO looks like a better yield/value play than other names mentioned. I like MSFT a lot but it seems a bit too expensive at current levels. No doubt CSCO products are all over the enterprise market. We used CSCO switches all the time at our data center and our hosting facility used CSCO routers exclusively so, like you, I can vouch for their presence. Thank you for stopping by and commenting.

  13. Tech is interesting because it could change in a second. I try to think of products and services I use every day. I work in IT so I am fairly versed. CSCO and MSFT stick out from an enterprise level. A lot of companies are either using or moving toward CSCO for all of their networking needs. And MSFT/ windows operating systems are used in just about any company. MSFT also makes servers and other corporation type products that are useful if not necessary in a business environment. Both of these would be solid choices.

    Don’t hear ORCL thrown around too much as far as stocks go. For business, they have their own database type language and I know a few companies are moving toward that. The Certifications (which are just as good as degrees in the IT field), for CSCO and ORCL are holding more weight these days and just keep getting more and more popular. That probably helps to add some intangible value to the company. However, I don’t know if that would be enough to make me buy ORCL stock over any of the others you mentioned.

    AAPL has a huge stock pile of cash and the brand recognition. The dividend should be safe for a while. And their dividend yield may be low, but the growth rate is pretty high. Around 10% if I remember correctly. So over time that will pay for itself. Current stock price is really high right now though. And with the whole thing about QCOM, we don’t know what will happen with that. Although QCOM has a product that is pretty necessary, giving them some power in the market still.

    My guess between all of these would go to CSCO, MSFT, or AAPL. At least from a DGI perspective. Looking forward to seeing what you choose.
    Dividend Daze recently posted…Recent Buy ā€“ LTC Properties (LTC)My Profile

    • Hi DD,

      Always appreciate your input as you are in the tech trenches like some others who commented above. No need to convince me about CSCO products in the enterprise world. In our data center where we host it’s exclusively CSCO routers and we use CSCO switches in our cabinet. While I’m not a Windows fan at all, we use Red Hat on our servers, Lubuntu on my laptop, I do know that Windows OS is also popular in the data center and business environments. I really like MSFT for their Azure offering. While smaller than AWS it is growing at a faster clip and can be part of a cloud duopoly or “triopoly” one day. So far, I’m leaning towards, MSFT, CSCO and QCOM as potential picks. Not sure when I’ll make a purchase but at least I’ll be watching those names more closely. Thank you for stopping by and commenting.

    • Hi Khaled,

      Your comment is to the point šŸ™‚ I appreciate you sharing your picks and assessment. I like pick 2 and 4 from your list and agree that I’d probably be better off waiting for a MSFT pullback before buying into that stock. Thanks for commenting.

    • Hi Passivecanadianincome,

      Thanks for sharing your holdings. CSCO at current levels looks interesting while MSFT also seems to be a solid pick but not at current levels. It’s definitely interesting to see what others are thinking in the tech space. As always, I appreciate your comment.

  14. I am long on:

    INTC
    QCOM
    CSCO

    and believe all have a bright future ahead. I’m currently looking at IBM since they seem to be attractive at the moment.

    Technology as IoT, autonomous driving, blockchain, etc will need these companies.

    • Hi MR,

      I like two of your three holdings. QCOM and CSCO seem to be trading at better values when compared to other names listed and while IBM is also trading at compelling levels I’d rather go the MSFT route instead. You make a good point that these tech stocks will definitely be needed for the foreseeable future as more and more devices go online all requiring faster chips, networking and software capabilities. Thank you for stopping by and commenting.

  15. I would say it depends on what it is you place the most value on. If it’s Blockchain, IBM and MSFT. If it’s patent libraries, QCOM. Consumer and Fintech, AAPL. Secure networks, CSCO. Each company has strengths and weaknesses which need to meld into your risk tolerance. Of your list, I hold QCOM, IBM and AAPL directly and manage accounts with CSCO and TXN (not on your list).

    • Hi Charlie,

      While every company mentioned is in the tech space I realize that each has its own niche that’s covered. Based on what I’m looking for and also from reading all the comments above I believe in the long term success of CSCO, MSFT and QCOM. TXN was mentioned by catfishwizard and for whatever reason gets no play among our investing peers. Similarly, ORCL doesn’t seem to garner much attention among the tech plays either even though their database is pretty much a standard in the enterprise world. Thank you for sharing your thoughts.

  16. Hi DH
    All solid companies on your list, for me personally, Apple looks by far most attractive to me. Its brand, products, ecosystem and financials strength makes that company extremely strong. Stocks of course had a run but the price still looks fair.
    Cheers

    • Hi FS,

      I really appreciate all the input from our fellow investing peers. It has been interesting to see which tech stocks have captured the most mind share and it will definitely assist me when it comes time to making a choice(s) about investing in the space. I’d say that CSCO, AAPL and MSFT seem to be the most popular picks with QCOM not far behind. All things to consider. Thank you for stopping by and commenting.

  17. DivHut,

    Good list. Of those, I own Apple, Cisco, and IBM. Despite Buffett recently selling some of his IBM, he still owns quite a bit. That would be a good one to look at. I own Cisco in my Roth IRA account and will be taking a good look at it again in January when I have some cash available to invest in it again.
    Two Investing recently posted…August 2017 IncomeMy Profile

    • Hi TI,

      Tech is one of two major sectors which I have zero exposure and wanted to get a feel about which companies our fellow investors own and like. I’m sure one day I’ll pull the trigger on a name or two in the space. MSFT, CSCO and QCOM look interesting to me for the long haul. Of course, there are some great non-dividend paying tech stocks that are equally compelling long term. AMZN comes to mind. As always, I appreciate your comment.

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