Seagate Technology Offers 4.4% Dividend Yield (STX)
By: Ned Piplovic,
Featured Image Source: https://www.seagate.com/our-story/
Companies in the Technology sector, aside from some of the largest and most established firms, tend to have either no dividend payment or, at best, a low-yielding dividend. With a forward yield well in excess of 4.0%, STX is a welcome exception to this trend.
As Seagate Technology offers both an above-average yield for the Technology sector and significant asset appreciation over the past 24 months, investors looking for a solid technology play away from the few technology giants would do well do consider STX for their own portfolios.
STX’s next ex-dividend date is on June 19, 2018. Acquiring shares of the company prior to that date will ensure investors are eligible to receive the upcoming dividend distribution occurring on July 5, 2018.
Seagate Technology PLC (NASDAQ:STX)
Founded in 1979 and headquartered in Dublin, Ireland, Seagate Technology PLC provides data storage technology and solutions in Singapore, the United States and the Netherlands. The company manufactures and distributes hard disk drives, solid state drives and their related controllers, solid state hybrid drives and storage sub-systems. Seagate’s products are used in enterprise servers and storage systems applications, client computer applications for desktop and mobile systems and client non-computer applications. This latter part can include various end-user devices, such as portable external storage systems, surveillance systems, network-attached storage, digital video recorders and gaming consoles. The company offers external backup storage solutions under the Backup Plus and Expansion product lines, as well as under the Maxtor and LaCie brand names available in capacities up to 120 terabytes.
Seagate’s current $0.63 per share quarterly dividend amount converts to a $2.52 annualized payout and a 4.4% forward dividend yield. Following a two-year period with no dividend payments, Seagate has been paying consecutive, rising dividends over the past seven years. In that time, the company has advanced its total annual dividend payout 250%, which corresponds to an average growth rate of nearly 20% per year.
Although 4.4% is not a huge yield, Seagate’s yield trounces the payments of its peers. This yield level is more than four times that of the 1.08% average yield of the entire Technology sector and nearly 300% higher than the simple average of all the companies in the Data Storage Devices industry segment. Additionally, as the highest yield of the industry segment, Seagate’s current dividend yield is nearly 50% higher than the 3.05% average yield of only dividend-paying companies in the segment.
Despite significantly outperforming everything around it, Seagate is presently underperforming its own five-year average yield of 5.4%. The main reason for this underperformance, in spite of robust annual increases over the past seven years, is the fact that the ratio of annual dividend payouts to price increases was skewed in favor of share price appreciation – especially over the past 24 months.
Over the last two years, STX’s share price increased almost 150%. The trailing 12-month period began with a 25% drop to a 52-week low of $30.60 in mid-August 2017. However, the stock then proceeded to shoot up more than 100% to a 52-week high of $62.70 on April 17, 2018.
After peaking in mid-April, shares pulled back about 10% before stabilizing and closed on June 12, 2018 at $57.10. That closing price was 35% higher than it was one year earlier and more than 30% above the 52-week low from August 2017.
Despite the fantastic two-year returns, Seagate actually fell over 70% from its all-time highs in December 2014. As a result, the current share price is only about 30% higher than it was five years ago. Naturally, this affected the company’s long-term total returns on shareholder investment. Over five years, the total return including dividend income was about 51%. The three-year return was around 20%. The total return over the past 12 months was 42%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.