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Old Tech Stocks Vs. Utilities Dividends: Old Tech Wins By A Landslide

Published Mon, 06 Jul 2020 13:25:32 -0400 on Seeking Alpha

Seeking AlphaDividend IdeasOld Tech Stocks Vs. Utilities Dividends: Old Tech Wins By A LandslideJul. 6, 2020 1:25 PM ET|| Includes: CSCO, D, DUK, HPQ, NEE, SO, STXby: Bill ZettlerBill Zettler Turnaround Stock AdvisoryFocused on value stocks with turnaround potential and low risk/reward ratioSummaryOlder technology stocks have been beaten down to a level where they have superior dividend yields.
Older technology stocks have huge, safe cash flows similar to utilities.
Utility stocks are overvalued compared to old tech stocks by almost every financial measure.
Utility stocks have regulatory and environmental risks, old tech stocks do not.
Overview I recently wrote an article, "IBM: Even Veteran Players Turn Around Eventually". In that article, I presented 5 reasons to buy IBM and number 3 was for the 5.2% dividend, which has been increased for 24 straight years.
Big dividends and year after year dividend increases used to be the domain of utilities. But low and behold, utilities are now being challenged in the dividend arena by some old, solid technology companies like IBM (IBM), HP (HPQ), Seagate (STX), and Cisco (CSCO).
To compare with the "old tech," I picked the four largest electric utilities in the US: Duke Energy (DUK), NextEra (NEE), Dominion Energy (NYSE: D), and Southern Company (SO). They would have to be considered among the most solid, strongest dividend-paying utilities in the world.
In this article, I compare the financial attributes of my four old tech stocks with big utilities to see if old tech stocks are indeed the "new" utility stocks.
Looking at old tech

IBM 5MB hard drive 1956 - Source: Business Insider
The old tech stocks have the advantage of growing markets, vast experience, gold-plated customers, and huge cash flows, at least compared to electric utilities. If we look at a table of the financial metrics I have picked out (dividend yield, PE ratio, sales, cash, and FCF (free cash flow), you can see how superior... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
DOMINION RESOURCES 78.54   53.8 1.46 3.67 4.77
SEAGATE TECH 56.30   7.9 7.11 2.52 4.55
SOUTHERN COMPANY 59.99   14.0 4.28 2.48 4.19
DUKE ENERGY 94.96   21.0 4.52 3.78 4.02
HEWLETT PACKARD 18.75   6.9 2.71 0.64 3.37
CISCO SYSTEMS 49.93   19.2 2.60 1.40 2.85
NEXTERA ENERGY 220.74   31.7 6.96 5.00 2.29

DOMINION RESOURCES - D
DOMINION RESOURCES - D  


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