In IBD’s Income Investor, the best dividend stocks are highlighted. In today’s segment, data storage company NetApp (NTAP) is in focus as a defensive company, and NTAP stock provides a nice yield in the tech space.
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Headquartered in San Jose, Calif., NetApp is a provider of information-technology storage. It also provides software to manage and optimize cloud data.
Compared with other highflying tech names, NTAP stock is a far more conservative choice for investors in dividend stocks. Realizing annualized volatility of just 24% over the past year, NetApp has moved even less on average than conservative tech stalwart Microsoft (MSFT). The software giant realized 27% annualized volatility.
Further, NetApp has a strong BBB+ debt rating from S&P Global, while also having more than $3 billion of cash on the balance sheet.
NetApp Offers Stability Among Dividend Stocks
With an increasingly uncertain macroeconomic environment, this stability is encouraging. And for investors in dividend stocks who want yield, a 2.7% return from NTAP stock is certainly solid in the tech space.
The company remains firmly committed to its dividend, pledging to pay out 100% of free cash flow in the form of income. With a quarterly dividend of 50 cents, investors who already own NetApp will be entitled to the next payout with an ex-dividend date of Oct. 5.
Unsurprisingly, however, stability and yield have come at the expense of growth —as is the case with most dividend stocks. In the first quarter, net revenue of $1.43 billion was a decline from $1.59 billion a year prior.
Per-share earnings appear to have peaked in fiscal 2023 — which ended April 28 — at $5.59. Analysts call for earnings to fall to $4.19 in fiscal 2024 before rebounding to $4.66 in 2025.
IBD Rankings For NTAP Stock
Despite the lack of growth, NetApp has held up well recently as market conditions have weakened.
NetApp, notable among dividend stocks, also places second in IBD’s Computer-Data Storage Group. That group is outperforming, and ranks 13th out of 197 industries.
Further, NTAP stock is currently forming a flat base with an 80.53 buy point, says MarketSmith Research.
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