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5 Stocks That Should Start Paying Dividends

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Investors tend to be drawn to hot technology and biotechnology stocks for their growth prospects – not for the cash they return to shareholders. But several well-known tech and biotech stocks could afford to invest in their businesses, buy back their shares and pay dividends, if only they chose to.

When it comes to returning cash to shareholders, corporate management often prefers stock buybacks to dividends because it gives them flexibility. A company can adjust its share repurchases according to business and market conditions. A dividend is a commitment. The market often exacts severe and swift revenge if a company cuts or suspends its payout.

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The initiation of a dividend can also be taken as a sign that a company or stock’s best days are behind it. A quick look at Apple’s (AAPL) performance shows that’s not necessarily the case. The company reinstated its dividend in 2012 after a 17-year hiatus. Between price appreciation and payouts, Apple stock has delivered a total return of about 170% since March 2012, when it announced plans to reinstate its dividend later that year – the Standard & Poor’s 500-stock index is up about 130% over the same span, including dividends.

The following five stocks don't yet offer dividends, but they should ... and could. Each has the cash-generation ability to start a regular payout without giving up on share repurchases and investments in future growth.

SEE ALSO: 53 Best Dividend Stocks for 2018 and Beyond

Data is as of Aug. 3, 2018. Companies are listed in alphabetical order. Analysts’ ratings provided by Zacks Investment Research.

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