Evolution of technology stocks on the American stock markets.

I am leaving the pen today to new contributor, Vincent Durivage of the Bourse en Direct blog. Even if the theme of his article today is somewhat different from the theme of my blog, it should be noted that some technology stocks could become excellent payers of increasing dividends in the future. ADP And LLTC are already proven examples, while MSFT and INTC are also well on their way to many consecutive years of increasing distributions.

The issue of savings and personal finances remains a latent question for many North Americans, whether American or Canadian. And this, very recently, because the latest studies have shown that the savings rate of Canadian and American households was in sharp decline (July-August 2012). This was a kind of electroshock for many savers who are now looking for solid investments for their money. And for many, the best solution consists of the combination of two strategies: the stock market and insurance and banking products. On the banking side, these are mainly TFSAs for their retirement and savings accounts with high interest rates and tax-free, such as, for example, the Swiss Capital Account (interest rate of 2%).

For stock market investments, it's a little more complicated. It's true that stock market values have resumed an upward trend since the end of Q2 2012, but making the right investment remains complicated, especially in new technologies. Savers remain cautious after Facebook's failed IPO. Just yesterday, the release after a "lock-up" of 234 million shares held by employees caused the share price of 4% to fall when Wall Street reopened after Hurricane Sandy. So are technology stocks uninteresting for investment? Will this sector follow the same path as when the internet bubble burst in 2008?

Actually, not at all, because some failures like Facebook actually hide the forest (and even Facebook's share price will have to go up, because the platform with 800 million users has a real and profitable business model). Thus, technology stocks on Wall Street gained about 21.1% in Q1 2012. Better still, the relative stagnation of Q3 2012 meant that prices remain very reasonable for new technology stocks on Wall Street, with the exception of social media.

The growth of many technology stocks is now secular, and the stagnation of many banking institution stocks due in particular to problems related to the need for recapitalization and management of European sovereign debt leaves the way open to new, younger and more dynamic stock market values, less dependent on economic developments. In addition, some of these listed new technology companies have excess liquidity that allows them to pay dividends that are very attractive to investors. Among these generous companies, we could list: Apple, Google, Cisco, Oracle and Qualcomm (even Microsoft). Companies like Oracle and SAP AG are even synonymous with stability, given the high barriers to entry into this market.

On the up-and-coming technology side, we could target in the very near future companies operating in data storage, enterprise software (such as Jive Software), mobility, video and cloud computing (such as F5 Networks). E-commerce sites are also very interesting (Amazon, Ebay or Priceline.com (for airline tickets). On the other hand, "hardware" seems riskier, because margins continue to gradually erode.

In conclusion, technology stocks remain one of the most interesting investments on Wall Street, provided you choose the right technology sectors.