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There was a time, perhaps over 20 years ago, when a retiree wouldn't dream of putting a technology stock in his/her nest egg. "It's too risky," they might think. "I can't afford that kind of volatility," others would say. "I want dividends," still others would protest.

But that was then, and this is now. Many of the world's most important and stable, dividend-paying companies are in the technology sector. Today's matchup of Apple (NASDAQ: AAPL) and IBM (NYSE: IBM) pits two such companies against one another.

Image source: Getty Images.

Of course, there's no way to know with 100% certainty which stock will end up being the better investment over the next five to 10 years. But by comparing them on three different facets, we can get a better idea of what we're paying for when we buy shares of either.

Financial fortitude

The first facet is the most straightforward: financial fortitude. Simply put, we want a company that can not only survive a financial downturn if it happened right now, but could actually grow stronger as a result of it.

How does that happen? When a company has lots of cash, little debt, and healthy free cash flows, it has options. During a downturn, it could buy back its own shares on the cheap, acquire distressed startups for pennies on the dollar, or simply bleed out the competition by undercutting them on price.

Keeping in mind that Apple is valued at over six times the size of IBM, here's how the two stack up.

Data source: Yahoo! Finance. Cash includes long- and short-term investments. Free cash flow presented on trailing 12-month basis.

On this facet, it's easy to declare a winner: Apple. Not only does IBM carry more debt than cash, it is facing off against the company with perhaps the strongest balance sheet in the world -- and over a quarter-trillion in cash waiting to be deployed.

Winner = Apple

Valuation

Next we have a murkier variable to assess: valuation. There's no single metric that can tell us if a stock is "cheaper" or "more expensive" than the other. But when we consult multiple data points, including price-to-free cash flow and free cash flow payout, we can get a more holistic view.

Data source: Yahoo! Finance, E*Trade. Price-to-earnings ratio computed using non-GAAP earnings when applicable. PEG = price-to-earnings-growth ratio.