If you look at the portfolio of most successful dividend investors, chances are you will see plenty of stocks from companies that you may already know. For example, long time dividend paying stocks like Johnson & Johnson (JNJ), Procter & Gamble (PG), and Coca-Cola (KO) are likely to be found in most dividend growth investor’s holdings.
There is a very good chance that most of the companies you will find are from the Consumer Staples or Consumer Discretionary sectors. That is because companies from these sectors have had a long history of stable dividend growth that spans for more than 25 consecutive years. Many of these stocks are also members of the Standard & Poor’s Dividend Aristocrat index.
One sector where you may not see a lot of dividend stocks available is from Information & Technology (IT) companies. While there are plenty of great IT companies to invest in, many don’t have the long history of dividend growth that other sectors may offer.
Let’s take a closer look at IT stocks that pay dividends.
IT Stocks with 25+ Years of Dividend Increases
There are only 3 companies currently found on the Dividend Champions list from the Information & Technology sector. Of these 3 companies, only one (Automatic Data Processing) is a member of the Dividend Aristocrat list. If you are looking for companies with a long history of dividend increases, there are very few options in the Information & Technology sector.
Here is a list of the 3 IT companies that have paid out dividends for 25+ consecutive years that are traded in the U.S.
- Automatic Data Processing (ADP) – 39 years
- Computer Services Inc. (CSVI) – 25 years
- Diebold Inc. (DBD) – 60 years
As you can probably tell from above, there are not a lot of options for investing in IT stocks with 25+ years of consecutive dividend growth.
Other Options for Dividend Investing in the IT Sector
If you want to invest in dividend paying stocks from the Information & Technology sector, your selection criteria will probably need to be modified. If you can look past the 25+ years of dividend increases, then there are several IT stocks available. There are plenty of companies in this sector that have logged at least 10 consecutive years of dividend increases.
At the time of this writing, there were 18 IT stocks found on the Dividend Contenders list with at least 10 years of consecutive dividend increases. While these companies may not have the long history of dividend increases, there are plenty of quality companies on the list.
Here are a few well-known companies found on this list with the number of consecutive years of dividend increases.
- Intel Corp (INTC) – 10 years
- International Business Machines (IBM) – 18 years
- Microsoft Corp (MSFT) – 11 years
- Texas Instruments (TXN) – 10 years
While none of the companies listed above have raised dividends for 25+ years, there are still some great IT stocks available that pay consistent dividends.
How to Buy IT Dividend Stocks and Save Money
If you want to save a little money on brokerage fees when investing in the IT sector, investors may want to check out LOYAL3. While the selection of companies available to invest in is small, 2 well known IT companies are on the list.
For as little as $10, investors can start buying shares of Intel Corp (INTC) and Microsoft Corp (MSFT) through LOYAL3 with $0 in brokerage fees! For the small investor just starting to build their dividend portfolio, this is a great opportunity to stretch your investment dollars.
I have been adding shares of INTC and MSFT for the past 5 months after setting up a monthly investment plan. Each month, I have been investing at least $50 in both companies by purchasing partial shares. This has allowed me to slowly diversify into the Information & Technology sector while saving on investment costs.
Information & Technology dividend growth stocks certainly do not have the long track record of those in other sectors like Consumer Staples. However, investors who are willing to expand their search criteria past 25 consecutive years of dividend increases can still find some reputable companies.
Well known technology companies like Microsoft, Intel, and IBM are establishing themselves as future dividend players. While there are no guarantees of future dividend growth, these companies have been raising dividends for at least 10 consecutive years and appear to have a bright future ahead of them.
Full Disclosure – At the time of this writing, I own shares in the following companies listed above – MSFT, KO, PG, JNJ, and INTC. This article is not a recommendation to buy any of the stocks listed. Investors should do their own research before investing in the stock market.
Photo credit: David Ohmer