Western Digital Corp. (WDC), EMC Corporation (EMC), Seagate Technology PLC (STX): How Should You Play It?

Seagate – juiciest dividend

Seagate Technology PLC (NASDAQ:STX) is a more direct competitor to Western Digital, providing electronic data storage products with the main products being hard-disk drives. Seagate also derived most of its revenue, 55% of the total revenue, from Asia Pacific while the American region ranked second, accounting for 26% of the total 2012 revenue. Seagate also has a concentrated customer base. Dell and Hewlett-Packard Company (NYSE:HPQ) are the two biggest customers, representing 15% and 14%, respectively, of the total sales in 2012.

Several days ago, Seagate Technology PLC (NASDAQ:STX) announced a new flash-memory solution portfolio, with its first client solid-state drive (SSD) and its next generation enterprise SSDs. According to the company, these new drives have high data integrity and ultra-fast speed. Gary Gentry, the senior VP and GM of the company’s SSD business said: “By adding more SSDs to our family of hard disk and solid state hybrid drives, we now have the broadest portfolio of storage products in the industry, delivering one-stop shopping for our customers and partners.” At $42.30 per share, Seagate Technology PLC (NASDAQ:STX) is worth $15.1 billion on the market. The market values Seagate at only 4.27 times EV/EBITDA.

Among the three, only EMC Corporation (NYSE:EMC) doesn’t pay any dividends. Western Digital offers shareholders dividend with a yield at 1.70%. Income investors must love Seagate Technology PLC (NASDAQ:STX) the most with its highest dividend yield at 3.70%.

My Foolish take

Although investors might be scared of Western Digital’s exposure to the declining PC industry, the company is moving away from the PC business to generate more revenue from the non-PC related segment. With growing revenue, double-digit return on invested capital, and very low valuation, Western Digital could be a sweet pick for investors at its current price.

The article The Profitable Play on the Hard Drive Business originally appeared on Fool.com.

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