With several market-spooking budget battles looming in the U.S. Congress this fall, investors need a way to defend against what figures to be a volatile market.
In this case, that means going after the best tech dividend stocks.
It most certainly does not mean panicking and dumping your stocks when the markets tumble. That's a sure way to lose a lot of money.
But you still need to steel yourself against the bumpy ride that is almost surely heading our way.
Just yesterday (Monday) the Dow Jones Industrial Average dropped 128.57 points, or 0.84%, and the Standard & Poor's 500 Index lost 10.20 points, or 0.60%, on fears of the first U.S. government shutdown in 17 years.
And while the markets seem blasĂ© about the government shutdown that started at midnight Monday, the next budget battle - over raising the debt ceiling - will get Wall Street's attention for sure.
If Congress doesn't raise the debt ceiling by Oct. 17, the United States could default on its debt, permanently damaging the nation's credit rating.
In times like these, says Money Morning Defense & Tech Specialist Michael A. Robinson, a few big, dependable tech dividend stocks can help investors weather the coming storm.
"There's a way to stay invested - to keep pursuing the life-changing profits that the 'right' tech-sector stocks can deliver - even as you muscle aside the painful gut punches that today's volatile markets can inflict," Robinson said.
The kind of tech dividend stocks we're looking for should be large so they can sustain short-term turbulence in the markets with minimal damage and cash-rich so they can afford to pay - and continue to raise - their dividend.
With $1.7 trillion on corporate balance sheets, Robinson said those who hold dividend stocks figure to see increasing payouts.
And successful investors know that dividend-paying stocks are a smart strategy regardless of other factors.
For instance, a study by Ned Davis Research earlier this year found that, over a period from 1972 through September 2012, dividend-paying stocks provided a return nearly 16 times higher than stocks that did not pay a dividend.
So let's take a look at what Robinson considers the best tech dividend stocks to buy now...
Two of the Best Tech Dividend Stocks to Buy Now
The first company Robinson likes right now is Microsoft Corp. (Nasdaq: MSFT). Yes, he thinks this much-maligned giant is one of the best tech dividend stocks.
For one thing, he likes that Microsoft just raised its dividend 15%, to 23 cents a share. That puts its yield at a respectable 2.7%.
But Robinson notes that the Redmond, WA-based company also has $56 billion of cash and equivalents on hand as of June 30 - which means future dividend increases are very likely.
He also thinks the company has made some smart moves that will pay off down the road.
"In the last several months, Microsoft has unveiled a sweeping corporate restructuring ... has said that longtime CEO Steven A. Ballmer will retire ... and announced a $7.2 billion deal involving the mobile-devices unit of Nokia Corp. (NYSE ADR: NOK)," Robinson said.
"I don't think the stock will just stand still for the next year," he continued. "If it can even manage to match the previous one-year gain of 7.3%, your "total return" [capital appreciation plus the dividend payout] rises to 10%."
That makes a point we often emphasize here at Money Morning - that the ideal dividend stocks combine rising payouts with capital appreciation based on earnings growth.
Though the companies are often viewed very differently, Robinson sees a number of similarities.
"Last year, new CEO Tim Cook decided to use some of the i-Device pioneer's $100 billion cash hoard to pay a special dividend to shareholders," he said. "That $2.65 payout worked out to a 1.8% yield."
But Apple also has started paying a regular dividend of $3.05 a share, which represents a 2.5% yield at the current price of about $485 a share.
Robinson is also impressed with the new iPhone 5S and 5C models, which sold a record-setting 9 million units in their first weekend of release. The high-end iPhone 5S has been hailed in the tech press for its best-in-class fingerprint recognition technology as well as its powerful 64-bit processor - the first in a smartphone.
As for growth, Apple is said to be close to a deal with China Mobile, the largest carrier in the world. That would open up a market of more than 700 million mobile phone users to Apple.
Then there are the Apple "wild cards" - iGizmos rumored to be brewing in the labs at Cupertino, such as an iWatch or a groundbreaking television product.
"Thanks to these developments, the one-time tech titans of Microsoft and Apple have reinvented themselves as growth-and-income plays," Robinson said.
But while Apple and Microsoft are sound investments now, Robinson has found a tech dividend stock that's even better. It's a "dividend aristocrat," one of just 50 or so stocks that have increased their dividend every single year for 25 years or more.
This company boasts a profit margin of 21% and a return on stockholders' equity (ROE) of 21%. It posted a 10% increase in profits last quarter. Robinson considers it hands down one of the best tech dividend stocks out there...
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