4 Nasdaq companies with dividends above 4%
The Nasdaq is often seen as an index of growth technology companies, where dividends are not as important. Yet even here you can find companies offering shareholders a dividend yield exceeding 4%. The combination of falling share prices, strong cash flow, and a long dividend tradition makes them interesting candidates for income-focused investors. Which four companies are they, and what is behind their high yields?
Key points
High dividend yield always has two sides. It also rises when the share price falls, and for most stocks in our selection, the price decline is the main reason why the yield climbed above 4%.
A payout ratio above 80% of earnings leaves little cushion for tougher times.
Company 1: More than half a century of consecutive dividend increases may not protect the firm from activist investor pressure.
Company 2: A P/E ratio below 5 for the company with the best-covered dividend in the whole selection shows how pessimistically the market can price a crumbling conglomerate.
Company 3: A drop of more than 50% from the highs may be just an optical illusion.
Company 4: Double-digit dividend growth and a yield above 4% at the same time sounds like an income investor's dream. But when a large acquisition optically boosts revenue and the payout approaches 100% of earnings, the sustainability of the payout will depend on organic growth in the coming years.
When you mention Nasdaq, most investors think of tech giants that reinvest all their free capital into growth and pay no dividends, or only symbolic ones. The average dividend yield of the Nasdaq 100 index has long been below one percent, significantly less than the S&P 500 index.
Yet high dividend yield always has two sides. On one hand, it can signal a mature business with stable cash flow that no longer needs massive investment in expansion and returns excess cash to shareholders. On the other hand, yield also rises when the share price falls. And that is exactly the case for most companies in today's selection. Dividend yield is calculated as the ratio of the annual dividend to the current share price, so any price decline automatically increases the yield.
However, it is crucial to distinguish between companies where the high yield is the result of a healthy dividend policy and those where it is more of a warning signal from the market. In today's article we will look at four Nasdaq companies that currently offer yields around 4 percent and higher.
Screener criteria
The selection was made using a simple screener. The criteria were a primary listing on the Nasdaq, a market capitalization in the tens of billions of dollars and above – to ensure established companies with liquid shares – and a forward dividend yield exceeding 4%. We deliberately excluded companies where the high yield results from special dividends or legal forms such as REITs or limited partnerships, because their payout mechanics are difficult to compare with ordinary corporations. The result is four companies from four completely different sectors.
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