Seagate Technology PLC (STX), Intel Corporation (INTC): Two Smart Dividend Picks for Your Retirement Portfolio

Chipzilla is here

Intel Corporation (NASDAQ:INTC) is another worthy contender for a place in an income portfolio. Rumors about the impending demise of the company have been abound for quite some time now. However, contrary to those rumors, the semiconductor behemoth is on its way to innovate and succeed. There are plenty of concerns about the company’s future, especially industry experts are skeptical about its ability to maintain the momentum in the post-PC era.

Declining PC demand

Ever since the advent of smartphones and tablets, PCs are consistently losing ground as go-to computing devices. Despite numerous attempts, Intel Corporation (NASDAQ:INTC) has not been able to make a patch in the mobile computing segment, where ARM Holdings plc (ADR) (NASDAQ:ARMH) clearly leads the pack. It is imperative for the company to innovate to gain hold in this emerging segment. Recently, it received a well deserved boost as Samsung chose Intel chips to power its new Galaxy Tab 3.

Intel is also looking to release new generation Atom processors, specifically designed for tablets and mobile devices. In May, the company announced Silvermont, its new architecture and recently demoed tablets with Bay Trail-T processor, based on the said architecture. Intel Corporation (NASDAQ:INTC) plans to capture low end tablet market with its new processors as it announced that some of the tablets containing these processors may cost as low as $199.

Investment thesis

Intel Corporation (NASDAQ:INTC) has an attractive dividend yield of over 3.5%. It also has a consistent track record of increasing its dividend payment. Further, the stock is up more than 23% so far this year, thus combining dividend income with good capital growth. The company’s current payout ratio is above 40%, which is moderately high. However, it still leaves enough room for further growth of dividend.

Intel recently released its new Haswell range of chips, which have received mainly positive reviews so far. Its new Atom processors are also expected to do well. Overall, Intel has good prospects going forward.

Stocks for steady income

For any Income portfolio, it is essential to include high quality dividend stocks which fulfill various criteria including high dividend yield, a low dividend payout ratio, and a good dividend growth rate. Both Seagate and Intel are in a highly competitive technology industry but still score high on the above yardsticks.

Both companies face tough challenges on account of a decline in PCs, however, they have shown resilience and innovation to secure their position. Thus, Seagate and Intel Corporation (NASDAQ:INTC) are good choice for dividend investors.

While Seagate Technology PLC (NASDAQ:STX) pays a significant and growing dividend and seems able to generate the cash flow to support it, a global slowdown in demand for digital memory storage has begun to put pressure on margins.

The article 2 Smart Dividend Picks for Your Retirement Portfolio originally appeared on Fool.com and is written by Sharma Rina.

Sharma Rina has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Western Digital. Sharma is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.