Twitter (NASDAQ: TWTR) has disappointed a lot of investors. All the major buyers that were reportedly interested have now backed out.
Earlier this month, Twitter shares soared to the highest we’ve seen them in 2016. Shares have now fallen more than 33% in just a couple weeks as buyout hopes crumbled.
Note that buyout rumors rarely work out.
Consider the Pandora (NYSE: P), Groupon (NASDAQ: GRPN) and Yelp (NASDAQ: YELP). All three have long been considered buyout targets. Yet their stock prices are down 45% or more in the last three years.
Instead, why not keep your sanity, give your portfolio some income and enjoy the prospect that your stock might be the predator and not the prey.
The three stocks below have all handily outperformed the S&P 500 over the last three years. These companies don’t have to hang their hopes on a buyout; instead, they have the ability to buy other companies that can help them grow. Plus, all three have dividend yields that make owning the shares anything but boring.
With all that in mind, here are the top three dividend stocks that could be buyers:
Apple (NASDAQ: AAPL)
Apple is paying a near 2% dividend yield. It’s only been paying a dividend for three years, but it’s only paying out 30% of its earnings via dividends. That leaves plenty of room for future increase and buyouts.
Right now, Apple is hyper-focused on the latest iPhone, but with some $200 billion in cash, there are plenty of opportunities for the tech company to make a splash. The strong ecosystem of hardware should keep bringing in plenty of cash for Apple to reinvest in the future – namely virtual reality, which could be a key market for Apple going forward.
Apple bought up PrimeSense in 2013, which was the developer of the Xbox Kinect. And it also bought an augmented reality company, Metaio, in 2015.
Disney is another company that was reportedly interested in Twitter. However, Disney likely rightfully decided that it needs to focus on addressing the ESPN concerns first. Still, Disney is already looking to make ESPN more of a digital player; to this end it bought up 33% of the streaming sports video service BAMTech.
Now, in terms of dividends, it is tough to find a more underrated one than Disney’s. The media giant pays a 1.6% dividend yield – so it’s not on anyone’s high-yield list. But it’s upped its dividend for five straight years and is paying out just 25% of its earnings via dividends.
Microsoft (NASDAQ: MSFT)
Microsoft just bought up LinkedIn and it still has a ton of cash on its balance sheet. It also, arguably, has the best dividend on our list. The tech giant has upped its dividend for 12 straight years and is paying out a 2.75% dividend yield.
The company could be on the prowl for acquisitions in the cloud space to help further bolster its push into the industry. Notably, current CEO Satya Nadella was previously in charge of the cloud computing business at Microsoft, so he understands how lucrative the cloud can be for Microsoft.
In the end, betting on buyouts can be a fool’s errand. The smart thing to do is to find dividend stocks of companies that have the wherewithal to do the buying.