Which Big Tech Stock Will Follow Apple's Lead?
Mar 22nd 2012 1:08PM
Updated Mar 22nd 2012 1:12PM
The world's most valuable tech company is sharing the wealth, and other big names are likely to follow.
Monday's long overdue news -- with Apple initiating a dividend policy -- should be the catalyst to get the other tech giants living in nil city on the payout front to begin cranking out quarterly dividend checks.
Sure, the timing is lousy. Tax rates on distributions may very well be heading higher in the coming years. However, now that Apple has shown that even the top dog in tech isn't beyond rewarding its investors with quarterly payouts, there may be pressure for some of the other fat cats to do the same.
Let's go over the five largest tech stocks, by market cap, that aren't currently shelling out dividends. I'll also follow that with my best guess on the odds of them initiating a dividend policy later this year.
- Google (NAS: GOOG) -- $210 billion market cap -- is a natural. The company's balance sheet is flush with greenery and regulators are growing weary of larger acquisitions by Big G. Revenue growth is also slowing at the world's largest search engine, making this a good time for this maturing growth stock to begin putting out. Odds: 3-to-1.
- Amazon.com (NAS: AMZN) -- $87 billion -- may not be such an easy sell. Margins have taken a hit over the past year as the company forgoes near-term profitability for the sake of building out its base of Kindle and Kindle Fire users. Amazon's balance sheet also is as top-heavy as Google or Apple. Odds: 15-to-1.
- EMC (NYS: EMC) -- $60 billion -- is seeing a lot of its tech buddies cranking out dividend checks in recent years. The enterprise storage and software behemoth has twice as much cash as it does debt, so the time seems to have arrived. Odds: 3-to-1.
- Baidu (NAS: BIDU) -- $50 billion -- is China's largest search engine. There have been a few stateside-trading Chinese companies that have begun payouts, but Baidu's growth makes it less necessary. Revenue in its latest quarter soared 83%, and there's still plenty of upside left. Odds: 30-to-1.
- eBay (NAS: EBAY) -- $48 billion -- is the company behind the namesake auction website but also PayPal. Business is booming at PayPal, though growth in eBay's marketplace business has slowed. It has made some notable acquisitions over the years, so it can always justify keeping its money to itself. In the end, it probably won't. Odds: 5-to-1.
It pays to pay out
Which of these five names do you think will be the next tech titan to roll out a regular dividend? Share your thoughts in the comments box below.
At the time this article was published The Motley Fool owns shares of Amazon.com, Apple, Google, and EMC. Motley Fool newsletter services have recommended buying shares of Baidu, Amazon.com, Apple, Google, and eBay. Motley Fool newsletter services have recommended writing puts on eBay. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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