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5 Best Dividend Paying Stocks in the Technology Sector

Investors looking for income usually go for dividends instead on betting on stocks that offer capital gains for wealth creation. Dividend-paying stocks also provide a cushion against equity market volatility.

With Wall Street swinging between bull and bear markets, there are chances of high volatility in the near future. While a series of mergers and acquisitions gave a boost to the technology market, the unknown impact of the interest rate hike, an aging bull market, the strengthening dollar, lower oil prices and global growth concerns like the Greece crisis and the slowdown in China, are testing investors’ patience.

This instability has compelled many to play safe and depend on dividend-paying stocks for steady returns. After all, such stocks have been the proven outperformers over the long term and are relatively safer bets.

Usually, an investor’s risk tolerance is a major factor that determines how the portfolio is organized. However, it is prudent to have a mix of both growth and dividend-yielding stocks. Also, while some companies may offer a special dividend to distribute a windfall, it is advisable to choose a consistent performer with strong fundamentals.

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Our Picks

Here are five dividend-paying stocks that are worth adding to your portfolio.

These stocks offer dividend yields of 2% or more. With the help of the Zacks Stock Screener and by combining high dividends, combining value, growth and momentum (VGM) score of “B” or higher and other valuation criteria, we have handpicked five promising stocks. Not only do these stocks have a high dividend yield but they also sport a Zacks Rank #1 (Sand momentum trong Buy) or #2 (Buy), indicating the likelihood of an upside in share prices over the next month or so.

Windstream Holdings, Inc. WIN

Dividend Yield: 7.62%

VGM: A

Headquartered in Little Rock, AR, Windstream is one of the largest U.S. rural local exchange carriers (RLEC), primarily operating in rural communities in the southern and southwestern parts of the U.S. The company, together with its various subsidiaries, provides local and long-distance phone service and high-speed Internet services to residential and business customers across 48 states.

The Zacks Rank #2 stock has a strong earnings surprise history and is likely to continue to benefit from its solid business model. Windstream posted positive earnings surprises in the past four quarters with a massive average of 187.51%. Its expected earnings growth rate over the next five years is 9.8%.  Year-to-date, the stock has gained nearly 19.25%.

CenturyLink, Inc. CTL

Dividend Yield: 6.9%

VGM: B

Based in Monroe, CenturyLink offers a range of telecom services, including local and long distance voice, wholesale network access, high-speed Internet access, managed hosting and colocation services and video services.

This Zacks Rank #1 stock has consistently raised the dividend over the past several years and performed decently on the earnings front as well. The leading RLEChas surpassed our EPS estimates in three out of the last four quarters with an average of 7.06%. The stock has gained roughly 26% year-to-date.

Lexmark International Inc. LXK

Dividend Yield: 4.65%

VGM: A

Lexmark is aleading vendor of digital printing hardware, software and consumables. The company provides complete digital printing solutions including inkjet and laser printers, multi-function products (MFP), photo printers and associated supplies and services for both office and home use.

This Zacks Rank #1 stock has consistently increased the dividend payout over the past several years and surpassed the Zacks Consensus Estimate for EPS in two out of the last four quarters with an average of 2.10%.

Logitech International SA LOGI

Dividend Yield: 3.19%

VGM: A

Logitech is a global leader in peripherals for personal computers and other digital platforms, which develops and markets innovative products in PC navigation, Internet communications, digital music, home-entertainment control, video security, interactive gaming and wireless devices.

The company plans to pay $250 million in dividends from financial year 2015 through 2017. This Zacks Rank #2 stock has surpassed our EPS estimate as well in three out of the last four quarters with an average rate of 53.04%. Year-to-date, the stock has gained about 6.64%.

EarthLink Holdings Corp. ELNK

Dividend Yield: 3.18%

VGM: A

EarthLink provides IT services and communications to business and residential customers primarily in the United States. The company's services include cloud computing, managed and private cloud, virtualization services such as managed hosting and cloud workspace, IT security, application hosting and IT support services.

This Zacks Rank #2 stock has regularly increased its dividend over the past several years. The company has surpassed our EPS estimates in all the last four quarters with an average surprise of 35.30%.

Bottom Line

A company distributes part of its earnings among stockholders through dividend either on a quarterly, a semi-annual or an annual basis. Thus, regular dividend payouts and hikes not only increase shareholders’ wealth but also highlight the strength of the company’s fundamentals.

So add these high-dividend yielding stocks to your portfolio for assured returns.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
LOGITECH INTL (LOGI): Free Stock Analysis Report
 
LEXMARK INTL (LXK): Free Stock Analysis Report
 
CENTURYLINK INC (CTL): Free Stock Analysis Report
 
WINDSTREAM HLDG (WIN): Free Stock Analysis Report
 
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