Dividends in tech-land: A trio of turnarounds

"As the tech industry has matured, some tech companies are devoting some of their cash flow to dividends," says George Putnam, adding, "This helps reduce downside volatility and offers some positive return when the stock prices lag."

In his industry-leading The Turnaround Letter, the advisor highlights some dividend-paying tech stocks; here's a look at three of those picks.

"Many tech stocks have underperformed for the last couple of years as capital spending on technology products has been weak. The sector will eventually rebound, but the timing is far from certain.

"A conservative way to play the industry is to focus on technology stocks that pay dividends. That way
you at least get paid something while you wait for the rebound.

"The following technology stocks pay decent dividends, many of them higher than the average 2.1% dividend paid by the stocks in the S&P 500 Index.

"American Software (NASDAQ: AMSWA), which has been around since 1970, is a leader in software for supply chain management and enterprise resource planning.

"While revenues and the stock price peaked in 1999 before the tech crash, sales have steadily grown in recent years, and the company has reported 27 straight quarters of profitability.

"It also has a strong relationship with Microsoft. A solid balance sheet and a growing cash position should support the dividend, which currently provides a yield of 6.1%.

"Nam Tai Electronics (NYSE: NTE) is a China-based electronics manufacturing and design company servicing the telecommunications and consumer electronics industries. Though all manufacturing operations are in China, slightly more than half of sales come from the Japanese market.

"In the latest quarter, growth in the firm’s LCD, consumer electronics and communications products units was offset by a sharp decline in the mobile phone segment.

"However, Nam Tai was still able to expand its gross margin and maintain a strong cash position, suggesting that its very generous 7.8% dividend yield is secure.

"United Online (NASDAQ: UNTD) was formed via the merger of Internet service providers NetZero and Juno Online in 2001; then in 2004, Classmates Online was acquired, followed by the purchase of MyPoints.com in 2006.

"Just recently, the company announced a planned purchase of FTD (the online flower seller), thus extending its intriguing history of acquiring turnarounds in the consumer Internet and media services markets.

"Consolidating the businesses hasn’t yet led to reliable top-line growth, but United has posted consistent profits and maintains strong financials. Upon the completion of the FTD acquisition, the dividend will be reduced to a still robust 3.3% yield."