Microsoft Corporation (MSFT), Hewlett-Packard Company (HPQ): Is This the Death of the PC?

For its part, HP remains a strong cash flow generator, producing more than $6.8 billion in free cash flow in fiscal 2012. If you’re willing to exclude the company’s massive impairment charge, Hewlett-Packard Company (NYSE:HPQ) would have earned diluted earnings per share of $4.05 during the fiscal year, meaning the stock trades for only five times its trailing diluted EPS.

Furthermore, Hewlett-Packard Company (NYSE:HPQ) uses part of its cash flow to pay a dividend, which it raised 10% in March. The stock now yields close to 3%.

Only time will tell whether the personal computer is truly dead. As of now, however, investors shouldn’t delude themselves into ignoring PCs’ declining sales. On the bright side, these three stocks provide compelling dividend yields in conjunction with what appear to be very attractive valuations. However, these companies need to demonstrate that they’re either reversing the trend in PC sales, or that they’ve found a way to penetrate mobile computing in a meaningful way.  Otherwise, there will be little reason for the stocks to see higher valuation multiples.

Until either of those catalysts materialize, investors will have to be content with slow-growth companies that should continue to pay their generous dividends, and also raise their payouts on an annual basis. If that’s what you want from your stocks, then Intel Corporation (NASDAQ:INTC), Microsoft Corporation (NASDAQ:MSFT), and Hewlett-Packard Company (NYSE:HPQ) may be just what you need. If you’re looking for the next major growth story, look elsewhere.

Robert Ciura owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Microsoft.