Everyone loves tech stocks. For the past several decades, they have been the big performers. They’ve led the charge to trillion dollar valuations and beyond. A Goldman Sachs note published last fall reported that between 2016 and 2020, FAAMG stocks delivered a 244% return. The remaining 495 stocks on the S&P 500 returned 41% during the same time. In September 2020, those five FAAMG tech stocks represented 23% of the total value of the S&P 500. Past performance is no guarantee for the future, but tech stocks still seem like a solid bet for growth.
What is better than a tech stock? How about tech stocks that also pay dividends? This delivers a killer combination: growth, plus cash flow. That’s the story with each of the tech stocks on this list.
- Amdocs (NASDAQ:DOX)
- Broadcom (NASDAQ:AVGO)
- HP Inc (NYSE:HPQ)
- Intel (NASDAQ:INTC)
- Lockheed Martin (NYSE:LMT)
- Northrop Grumman (NYSE:NOC)
- Skyworks Solutions (NASDAQ:SWKS)
There are even a few companies on this list of tech stocks with dividends that are also big players in the defense industry. Given that the U.S. defense budget approved for 2022 is $770 billion, these stocks make a compelling case even more attractive.
Tech Stocks: Amdocs (DOX)
This Israeli (although based in Missouri) company has been around for 40 years. These days, Amdocs is focused on working with media and communications companies, helping them integrate next-gen digital customer solutions through its 5G and cloud-native offerings. The company’s involvement can range from customer support solutions to helping clients monetize their growing IoT (internet of Things) platforms.
Amdocs is a big business, with 28,000 employees globally, $4.3 billion in revenue in 2021 and a market capitalization of over $9.4 billion. Until an October dip caused by a Q4 earnings miss, DOX stock had delivered growth of over 16% to that point in the year. And DOX is on this particular list of tech stocks because it pays a dividend. At this point its dividend yield is 1.93%.
Among the investment analysts tracked by the Wall Street Journal, DOX stock is currently rated as “overweight.” Their average 12-month price target of $88.57 offers 17% upside.
At the time of publication, the Dividend Grader rating for DOX stock was “A.”
Broadcom continues to be one of my favorite tech stocks. The company always seems to be in the thick of all the big technology trends. At the moment, Broadcom is benefiting tremendously from 5G. The company is a supplier of commercial 5G solutions like base stations and switches used by cellular providers. But Broadcom is also supplying a range of networking chips used in smartphones. As consumers upgrade to a new phone to get 5G, Broadcom is selling Wi-Fi, GPOS and Bluetooth chips to the manufacturers.
Spending on 5G has helped Broadcom deliver a series of record-setting quarters. That, in turn, has seen AVGO stock deliver a return of 59% in 2021. Broadcom has also been rewarding investors.
In its fourth quarter earnings report, the company’s CEO made this announcement (bringing AVGO’s dividend yield to 2.2%): “Consistent with our commitment to return excess cash to shareholders, we are increasing our target quarterly common stock dividend by 14 percent to $4.10 per share per quarter for fiscal year 2022, and announcing a new $10 billion share repurchase program.”
AVGO stock currently rates an “A” in Dividend Grader.
Tech Stocks: HP (HPQ)
Some people still think of HP as a tech dinosaur. A computer and printer maker in the age of smartphones. In a way, that’s more true than ever — the original HP split into two companies in 2015, with HP Inc becoming the company focused on PC and printer sales.
That’s felt a lot less like a “dinosaur” thing over the past 2 years. With the pandemic kicking off an era of working from home, PC sales have been up. In 2021, that’s expected to equate to a year of 14.2% growth for the industry. That will slow, but is expected to continue in the single-digits into 2025, which is a remarkable turnaround after years of decline. Printers are selling as well.
In addition, HP is looking to the future through leadership in technology such as 3D printing. For its full year fiscal 2021, HP reported revenue up 12.1% year-over-year, and the company shattered its own earnings outlook. HPQ stock was up 58% in 2021, making it a growth performer among tech stocks. The company’s 2.1% dividend yield is the icing on the cake.
The current Dividend Grader rating for HPQ stock is “A.”
It’s easy to look at Intel and see another PC dinosaur. In the case of Intel — cursed with processor delays, competition in its core x86 CPU market that is seeing the company bleed market share, and CEO troubles — the analogy has been a dinosaur trapped in tar pit. While other tech stocks have benefitted significantly from the pandemic-spurred growth in laptop sales, INTC stock has struggled. At this point, it managed 4% growth for 2021, but it’s down 24% from January 2020, pre-pandemic levels.
I say this is a strong case of opportunity knocking. Through its darkest days, Intel has continued to pay a dividend. Its current dividend yield is 2.8%. Intel is also moving aggressively after years of stumbling. The company has been snapping up capacity at third party silicon fabricators to get back on track with its delayed 3nm chips. This year, Intel unveiled new 3D stacked-chip CPU designs that would leapfrog rivals to reclaim the PC performance crown. The company is also on the verge of releasing its own consumer graphics cards in 2022.
Intel stock at its current price is positioned to deliver big growth if the company can come even close to hitting its ambitious production roadmap.
At the time of publication, INTC stock earned an “A” rating in Dividend Grader.
Tech Stocks: Lockheed Martin (LMT)
Lockheed Martin is one of those tech stocks I referenced in the intro that also happens to be a big player in the defense industry. In fact it’s the largest U.S. defense contractor by far, with $74.2 billion in contracts for 2021.
However, Lockheed Martin deserves inclusion in this list because so much of what the company does is technology-driven. Much of that tech is military-based, but the company also operates in the civilian space as well. For example, the James Webb Space telescope was recently in headlines. Its primary camera is a Lockheed Martin NIRCam (near infrared camera).
Lockheed Martin’s GridStar Flow is a high-capacity battery storage system aimed at clean energy facilities like solar and wind farms. The company even sells advanced, digital train management systems for improved safety and on-time performance.
Count LMT among the tech stocks that also pays a dividend. In September, Lockheed Martin announced that quarterly dividend payment would be hiked 20 cents to $2.80 per share. That gives LMT stock a juicy 3.1% dividend yield.
LMT stock currently earns an “A” rating in Dividend Grader.
Count Northrup Grumman as being in the same club as Lockheed Martin. It’s one of those tech stocks that is heavily involved in the defense industry (the fifth largest U.S. defense contractor), but it is a very technology focused company. In fact NOC’s second-highest performing division in terms of revenue is Space Systems.
NOC stock has been in growth mode for the past decade, offering a return of nearly 600% during that time. It closed at an all-time high of $406.62 in October. Despite slipping since then, shares are still up 31% this year. Northrup Grumman also pays a quarterly dividend. The latest dividend payment was announced on Nov. 17. At $1.57 per share, this gives NOC stock a 1.6% dividend yield.
The most recent Dividend Grader rating for NOC stock was an “A.”
Tech Stocks: Skyworks (SWKS)
California-based Skyworks Solutions is a semiconductor company. It provides chips covering a wide range of high-tech growth markets including 5G, Wi-Fi 6, automotive and IoT. Skyworks uses a hybrid model where it operates its own foundry to manufacture chips, but also has strategic partnerships with suppliers for some components.
The hybrid approach has shielded Skyworks from the worst of the chip shortages that have hit many fabless semiconductor companies. At the same time, demand for Skyworks chips has gone through the roof thanks to ramped-up adoption of advanced communication technology.
You can see the full effect in Skyworks’ full-year 2021 results, which the company reported in November. Record-setting revenue of $5.1 billion was up 52% compared to 2020. The company’s CEO set out a roadmap that includes expansion and continued investment in the pursuit of new technology: “Looking ahead, Skyworks’ cash generation ability is funding capacity expansion and next-generation technology development, positioning us for continued leadership and sustainable growth as the transition to 5G and other advanced connectivity solutions continues.”
The company also announced a 56 cent per share quarterly dividend payment, bringing SKY stock’s dividend yield to 1.4%.
At the time of publication, SWKS stock earned an “A” rating in Dividend Grader.
On the date of publication, Louis Navellier had a long position in AVGO, LMT and SWKS. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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