Have Your Tech and Income, Too

The technology sector is not known for its dividend payers, but stocks like Evertz Technologies Ltd. (TSX:ET) buck the trend.

| More on:

Investors shopping for technology stocks on the TSX will find that there isn’t a great deal of selection available. There are only 52 stocks that make up the TSX technology sector, and nearly a quarter of them are nano-caps, smaller than $50 million.

Investors will also notice that very few Canadian tech names pay dividends. Only 15 tech stocks on the TSX offer dividends, and those that do often have miserly yields; Constellation Software Inc. (TSX:CSU), the largest technology stock by market capitalization on the TSX, yields less than 0.5%.

This article will examine three technology stocks with yields of around 4% that can help add sector exposure and diversification to any income portfolio.

Evertz Technologies Ltd. (TSX:ET)

Evertz provides solutions for the broadcast industry, supplying software and equipment for video and audio production and distribution. The company invests heavily in research and development and prides itself on being an innovator at the forefront of its industry.

So far, it would appear that Evertz has a winning strategy, as it has achieved an average five-year return on equity of around 18.5%. In other words, the company is strongly profitable and employs its capital effectively.

At its current price, Evertz trades at a price-to-earnings multiple of roughly 19 and a price-to-book ratio of around 3.6. Evertz pays a quarterly dividend of $0.18 for an annualized yield of about 4.5%.

Computer Modelling Group Ltd. (TSX:CMG)

CMG is a software company that develops and markets recovery and reservoir simulation tools for the oil and gas industry. The company’s professional services segment provides consulting, training, and research.

CMG’s growth has been dampened in the medium term due to weakness in the price of oil. Looking back to before oil began to enter its period of weakness in late 2014, the company was performing so well that it still has 10-year average earnings growth of almost 9%, despite negative earnings growth in the one-, three-, and five-year time frames. 

CMG looks expensive right now with a current price-to-earnings multiple of just under 40, but it has a great deal of potential should oil return to its previous highs.

In any event, CMG will pay you to wait with a quarterly distribution of $0.10, which equates to a yield of almost 4%.

Absolute Software Corp. (TSX:ABT)

Absolute provides endpoint security solutions that protect sensitive data and reduce the risk of breaches. To put it simply, the Absolute platform makes sure that missing consumer, corporate, or government cellphones and laptops don’t provide an avenue for attackers to cause the next data breach scandal.

With over 15,000 customers internationally, Absolute is a growing security company in an expanding market. Amid mixed recent financial results, analysts covering the company have an average rating of “hold,” and the consensus price target of $7.55 represents potential upside of a bit less than 10%.

Absolute offers a quarterly dividend of $0.08 for an annualized yield of around 4.5%.

Conclusion

Despite the small pool of technology stocks on the TSX, a little digging shows that there are still options available for income investors. Diversification is an important aspect of portfolio building and management, and the stocks discussed can provide some variation to portfolios overweight in high-dividend sectors such as financials, utilities, and telecoms.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor James Watkins-Strand has no position in any of the stocks mentioned. The Motley Fool owns shares of COMPUTER MODELLING GROUP LTD. Computer Modelling Group is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »

Payday ringed on a calendar
Dividend Stocks

3 Dividend Stocks That Pay Me More Than $54.57 Per Month

These three dividend stocks have done me well over the years, so let's look at how much I've gotten in…

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Royalty: 3 Fabulous Stocks to Buy Now for Decades of Passive Income

Rogers Communications stock and Canadian Natural Resources stock could pay you dividends for decades to come.

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

For growth and dividends this April, look to these two REITs that have quite the promising present as well as…

Read more »