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3 Tech Stocks With Generous Yields for 2020 – Nasdaq


Cisco Systems, Taiwan Semiconductor Manufacturing, and Texas Instruments look like good buys for income-hungry investors, says one money manager.

Cisco Systems, Taiwan Semiconductor Manufacturing, and Texas Instruments look like good buys for income-hungry investors, says one money manager.

With the year drawing to a close, income investors are looking ahead to 2020.

Many observers expect interest rates to remain low next year. The 10-Year U.S. Treasury note is yielding around 1.8%, making stock dividends all the more appealing. The S&P 500 yields about 2%.

Greg Powell, deputy chief investment officer at Miller/Howard Investments in Woodstock, N.Y., cites three legacy technology stocks that he thinks make sense for income-focused investors: Cisco Systems (ticker: CSCO), Taiwan Semiconductor Manufacturing (TSM), and Texas Instruments (TXN). All three offer generous dividend yields.

Cisco’s shares have been under pressure. In mid-November, it announced that the revenue in its quarter ending in January would be down 3% to 5%, surprising the market and pressuring the stock.

Powell, however, believes that the company’s longer-term prospects are sound. Cisco, he says, “is a leading producer of switching and routing products [that] should continue to grow for years with the expansion of both cloud computing and the internet in general.”

The stock, which yields 3.2%, has a one-year return of about minus 5%. The company has regularly raised its dividend in recent years, most recently to 35 cents from 33 cents on a quarterly basis. That was a 6% boost.

Miller/Howard Investments manages about $3.8 billion in dividend stocks, infrastructure holdings, and other strategies.

Another of Powell’s picks is Texas Instruments, which makes analog chips that are used in automobiles, factories, and other settings.

Powell says the company, whose stock yields 3%, should benefit from growing demand, says Powell. In October, the chip maker declared a quarterly dividend of 90 cents a share, up nearly 17% from 77 cents. The stock has a one-year return of nearly 30%, compared with about 18% for the S&P 500.

Powell’s other pick is Taiwan Semiconductor Manufacturing. Powell calculates that its locally traded shares (2330.Taiwan) yield about 3.2%.

“As technology has evolved, chips have used progressively smaller line widths in their circuits,” he says. “Fewer and fewer companies have been able to manage the increasingly tight specification.”

The American depositary receipts have a one-year return of about 50%.

Write to Lawrence C. Strauss at lawrence.strauss@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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