Investors often think of the technology sector as a high-growth area. That’s for good reason, as some of the largest companies in the world reside in this area. The downside of such high growth is that investors often are willing to pay a premium multiple but often rush to the exits at the first sign of trouble. Aside from healthcare, no sector has endured a more challenging 2022 than technology stocks, which are down about 42% year to date (YTD).

The plus side of the downturn is that there are quality technology stocks now trading at much more reasonable valuations. These stocks also provide meaningful levels of income to go along with strong total return potential, which should appeal to both value and dividend growth investors alike.

This article will examine three technology stocks yielding more than 3% that could deliver double-digit annual returns.

CSCO	Cisco	$45.51
SWKS	Skyworks Solutions	$86.66
TXN	Texas Instruments	$161.06

Cisco (CSCO)

First up is Cisco (NASDAQ:CSCO), one of the largest high-performance computer networking systems in the world. The company is valued at $171 billion and has annual revenue of approximately $54 billion.

Cisco has long been the most dominant name in enterprise networking. This has been the case for so long that it is estimated that the vast majority of data transferred over the internet for the past three decades has been done so through the company’s products. As a result, Cisco’s switches and routers are very entrenched in the industry.

That said, the company has made efforts to move beyond hardware. This includes offerings such as cloud storage and security products that are very intertwined. This makes it difficult for customers to switch providers without enduring high switching costs.

Cisco has also transformed into more a software-as-a-service company, which allows for recurring revenue sources and helps to remove some cyclicality from its business. Deferred revenue has been growing at a strong rate for some time now. For example, Cisco’s deferred revenue grew 11% to $23.3 billion in the fourth quarter of fiscal year 2022.

The company also has one of the best balance sheets in the industry. Cisco ended the fiscal year with total assets of $94 billion, including almost $19 billion of cash and equivalents against total liabilities of $54 billion and long-term debt of just $8.4 billion.

Given the strength of its business and the company’s ability to offer smoother revenue results, we believe that Cisco is capable of generating earnings growth of 6%, which is close to the long-term average.

Cisco’s dividend growth streak stands at 12 years. Shares currently yield 3.6%, which is twice the average yield of 1.8% for the S&P 500. With a projected payout ratio of 43%, it is likely that the company’s dividend will continue to grow.

The final component of our projected return model is valuation. Historically, Cisco has a price-to-earnings (P/E) ratio of slightly more than 13. We have a fair value target of 14 times earnings given the positives working in the company’s favor. With shares trading at 11.9 times earnings, this implies an annual tailwind of 3.3% from multiple expansion over the next five years.

In total, we forecast that Cisco will offer annual returns of 12.4% over the next five years, stemming from a 6% earnings growth rate, a starting yield of 3.6% and a low single-digit contribution form multiple expansion.

Skyworks Solutions (SWKS)

The next technology name to consider is Skyworks Solutions (NASDAQ:SWKS), a leading semiconductor company. The company is valued at more than $13 billion and has produced revenue of just over $5 billion over the last year.

Skyworks Solutions designs and sells semiconductor products to a wide variety of customers around the world. The company’s amplifiers, antenna tuners, converters, modulators, receivers and switches are used in end markets such as automotive, connected home, defense, industrial, medical and smartphones.

Of these markets, smartphones might be the most important at the moment. This is because of the ongoing 5G rollout. Most of the major carriers have turned on 5G service, but customer upgrades to devices that can access this network is ongoing. It will take time for the majority of customers to acquire a 5G device, which should provide Skyworks Solutions with tailwinds to its business.

There will be immense competition in the 5G space, but the company’s expertise, size and scale should work to its advantage as more people switch to the service. Skyworks Solutions’ products are used by some of the largest technology names involved in 5G, such as Apple (NASDAQ:AAPL), which gives the company a partnership with some of the top makers of smartphones.

Skyworks Solutions has increased EPS at a high rate over the last decade. However, we believe 5% earnings growth going forward is more likely given the high base that the company is starting from.

The company has raised its dividend for 10 consecutive years, and the stock is currently yielding 3.1%, one of its highest yields in its history. The projected payout ratio of 21% is extremely low and leaves ample room for Skyworks Solutions to continue to raise its payments to shareholders.

Shares of the company are trading at just 7.3 times expected EPS for the year. With a fair value price-to-earnings ratio of 12, we believe that Skyworks Solutions will see multiple expansion add 10.5% to annual returns over the next five years.

In total, Skyworks Solutions is projected to return 18.1% per year for the next half-decade. This is due to 5% earnings growth, a starting yield of 3.1% and a low double-digit valuation tailwind.

Texas Instruments (TXN)

Our final technology name is Texas Instruments (NASDAQ:TXN), one of the largest semiconductor companies in the world. The $145 billion company has generated revenue approaching $20 billion over the last 12 months.

Texas Instruments has two business segments. The analog segment produces products that help in the management of power in electronic systems and that measure signals that allow information to be transferred or converted. The embedded processing segment makes semiconductor chips that can be used in a multitude of applications.

The company’s products are used in several different areas, including automotive, where the sophistication of cars and trucks has greatly increased. This will require more advanced components in order to meet the needs of manufacturers. Other important end markets include industrial applications and communication services.

Texas Instruments has also invested heavily to design more advanced chips, which has helped to solidify its place in its industry. This has led to strong margin performance over long periods of time. The company’s EPS have compounded at a double-digit rate over the last decade, but we forecast earnings growth of 7.5%, as we feel this builds in some measure of protection against what has typically been a cyclical business.

Texas Instruments yields 3.2% today. The company’s lengthy dividend growth streak of 19 years is one of the longest in the technology sector and growth rates have been robust over the long term. The projected payout ratio for 2022 is 52%.

The stock is trading with a price-to-earnings ratio of 16.9. We believe fair value is closer to 20 times earnings, which is near the historical valuation. Reverting to our target price-to-earnings ratio would add 4.3% to annual returns going forward.

Therefore, Texas Instruments is predicted to provide annual returns of 14.7% through 2027, stemming from 7.5% earnings growth, 3.2% dividend yield and a low single-digit contribution from an expanding multiple.

On the date of publication, Bob Ciura did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.