NEW YORK (CNN/Money) - Last year should have been the one when many techs finally started to give back some profits to shareholders.

President Bush proposed a dividend tax cut in January and shortly thereafter, Microsoft announced that it would begin paying a dividend. Qualcomm quickly followed suit and pressure was mounting on other tech titans to do the same.

After all, the economy was looking shaky and there was a war looming. With tech investors nursing three years of brutal losses, it seemed wise for stable tech companies to throw investors a bone.

But then a funny thing happened. Tech stocks took off.

With the market seemingly on firm footing, it may be tempting to say that tech investors should no longer clamor for dividends (what, after all, is a couple of cents in dividends next to share-price gains of 50 percent or more?).

Thinking that way would be a big mistake. I realize this may sound heretic to investors who think techs should only spend on things like research and development and acquisitions. A dividend? Isn't that a sign that a company has nothing better to do with its cash?

That's not quite right. Microsoft may have underperformed the market last year but it's not because the company started paying a dividend. (Microsoft reported mixed earnings Thursday. For more details, click here.)

Growth...and a little income These seven dividend paying techs enjoyed solid gains in 2003. Company  Dividend yield  Price change  Adobe Systems  0.1%  57.6%  Analog Devices  0.3%  91.2%  Hewlett-Packard  1.3%  32.3%  Intel  0.5%*  105.8%  Qualcomm  0.5%  48.2%  SAP  0.4%  95.7%  Texas Instruments  0.3%  113.1%   * This reflects Intel's dividend increase, which will take place March 1, 2004.  Source:  Thomson/Baseline

Intel pays a dividend, and it's stock doubled last year. On Wednesday, it even moved to double its payout.

And at risk of sounding like Howard Dean's primal scream concession speech, here's a list of some other techs that had solid years in 2003, even though they are "stodgy" dividend payers: SAP! ADOBE SYSTEMS! HEWLETT-PACKARD! YEAH!!!

Granted, most of these dividends are tiny. HP has one of the highest dividend yields in tech, but at 1.3 percent, it's a bit below the S&P 500's average of 1.5 percent.

Still, I don't think large techs need to start off with enormous payouts. Like Microsoft and Qualcomm, a small dividend that could be steadily increased over time would be key. And relatively young companies should continue to eschew dividends.

Dell, Cisco Systems and Oracle don't have an excuse anymore. They have lots of cash and little debt.

Let's look at Dell first.

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If it started paying a dividend of 18 cents per share, that would work out to about a 0.5 percent yield -- in line with Intel, Microsoft and Qualcomm. This would cost Dell (DELL: Research, Estimates), with 2.56 billion shares outstanding, about $461 million annually.

That's chump change considering Dell generated $2.6 billion from operations in its third quarter and has about $5 billion in cash overall. A Dell spokesman was not available for comment.

Dell doesn't spend all that much on R&D compared to other hardware companies. HP, for example, spent nearly 5 percent of its sales on R&D in its latest quarter while Dell spent just 1 percent. And Dell rarely makes acquisitions. But Dell does spend heavily on buying back stock. It repurchased 48 million shares for about $1.5 billion during the first three quarters of its latest fiscal year.

That's a big problem. Tech companies are quick to point out that a dividend is not a prudent use of cash but at the same time many are forced to spend billions on share repurchases just to offset potential dilution from options grants.

A spokeswoman for Cisco said the company is not considering a dividend at this time because management thinks stock buybacks and investing in its business are better uses for its cash. Cisco spent $2 billion in its latest quarter to repurchase stock.

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But if the company paid a dividend of 14 cents a share (which would yield 0.5 percent), it would cost Cisco (CSCO: Research, Estimates) only $966 million a year. That's a drop in the bucket for a company that generated $973 million in cash from operations in its latest quarter and had $9 billion in cash, not to mention another $10.7 billion in long-term investments.

Oracle would need to pay a dividend of about 8 cents a share in order to yield 0.5 percent. That would cost Oracle (ORCL: Research, Estimates) about $418 million annually. Oracle generated $1.6 billion in cash from operations in the first six months of its latest fiscal year and has $8 billion in cash.

So a dividend shouldn't prevent Oracle from continuing its pursuit of PeopleSoft, or for that matter, targeting another software company. Oracle, despite the hostile bid, did buy back nearly $400 million in stock during its past two quarters.

Oracle CFO and chairman Jeff Henley said last January that Oracle would reconsider its stance on dividends if there were tax changes. Even though Congress passed the President's tax cut bill in May, an Oracle spokeswoman said the company does not have any new plans regarding a possible dividend.

But as their cash hoards continue to climb, these companies, and others with strong balance sheets, will need to consider a dividend, especially if tech stocks fail to repeat their performance from 2003.

"If we had a softer market last year, you would have seen a lot more dividend initiations from tech. They got bailed out by the market," said James Denney, manager of the Electric City Dividend Growth fund.

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