Dividend-paying tech stocks are shares of technology companies that include regular dividend payments. Tech firms generally reinvest their profits back into the business and seek growth rather than returning capital to shareholders through dividends. That said, many tech companies pay dividends. These dividends attract investors who like the steady income dividends represent.
Investing in dividend-paying tech stocks provides the benefits of regular income and potential capital appreciation. Tech stocks have been one of the fastest-growing sectors over the past few decades. Although the past year has been tough on the sector, most investors expect it to rebound long term. The dividends these shares include provide income while the sector normalizes.
IBM (NYSE:IBM) stock represents a technology company often cited for its dividend. The company offers a range of hardware, software, and services. IBM is particularly well-known as a leader in enterprise computing, artificial intelligence, and cloud computing. The company boasts a diverse customer base that includes governments, businesses, and individuals and operates globally.
IBM might be a controversial pick to lead this list, as the stock has shown weak returns over the past decade. In fact, $1,000 invested in its shares would only have grown to $1,024 today(1). But that return does not include IBM’s dividend, which has not been reduced since 1994. That dividend currently yields 4.9%, which is an impressive rate across all stocks, particularly so within the tech sector.
IBM has real growth prospects moving forward. The company is a leader in artificial intelligence (AI). There’s every chance that the company’s recent performance could change due to AI.
Cisco (NASDAQ:CSCO) stock is another well-known tech name with a substantial dividend. The company provides networking hardware, software, and services. Cisco sells products and services, including routers, switches, security systems, and cloud services. Cisco’s shares have appreciated in 2023 after falling from $55 to $47 throughout 2022.
Cisco shares currently trade near $50, with analyst consensus suggesting they should appreciate roughly 10% over the next 12-18 months based on the target price. Cisco recently delivered strong results with 7% sales growth topping expectations. In turn, management increased guidance for the full year. The positive news is a bright spot within tech, as many firms are bracing for negative earnings news.
Cisco’s revenues increased 7% to $13.59 billion in the quarter, and the company expects current fiscal-year growth to be between 9% and 10.5% year-over-year. Those results and expectations prove that tech growth is far from over. Cisco’s dividend has not been reduced since 2011 and recent strong results indicate that will continue to be the case.
Texas Instruments (TXN)
Texas Instruments (NASDAQ:TXN) is a semiconductor design and manufacturing company serving multiple industries. Its products include digital signal processors, microcontrollers, and power management solutions, among others. The company’s latest dividend equaled $1.24, yielding 2.82% for its holders.
Texas Instruments reported earnings in late January with earnings per share of $2.13. That EPS was well above the $1.98 consensus Wall Street was expecting. So, from that perspective, Texas Instruments did well. Despite beating expectations, revenues still decreased by 3% on a year-over-year basis and fell 11% sequentially.
There were several bright spots in the report aside from the higher-than-anticipated EPS. Texas Instruments reported $5.9 billion in free cash flow for the year on $20.03 billion in sales. It also returned $7.9 billion to shareholders, showing its commitment to income investors. Further, automotive demand increased, a potential point of strength moving forward.
Microsoft (NASDAQ:MSFT) stock is one of the most well-known tech shares. The company has also been paying dividends to its shareholders for nearly two decades. The company has a strong balance sheet and consistent cash flows, which allows it to offer a reliable and growing dividend. The company has a track record of increasing its dividend payout and has done so every quarter since its inception in 2003.
In 2022, Microsoft paid its shareholders $2.54 in dividends per share. While that equates to a relatively low yield of 1%, it’s exceptionally sustainable, judging from the dividend’s 0.28 payout ratio. That stable dividend has grown at a rate of 9.7% over the past five years, which is another positive sign overall.
Sales at Microsoft grew by a relatively low 2% in the most recent quarter. Increasing costs and decreasing operating income led to a net income of $16.4 billion during the period, down 12%. But rapid cloud revenue growth and a resurgent LinkedIn were strong points for the firm. A rebound seems highly likely for MSFT, and growth is a near certainty for one of the strongest firms in the world.
Apple (NASDAQ:AAPL) stock has grown at an astronomical 26.75% annually over the past decade. Growth at such a prolific rate is usually a consequence of reinvesting everything back into the company. Thus, investors might not expect that Apple has been steadily rewarding investors with a dividend during that period. However, it has.
The company reinstituted its dividend in 2012 and hasn’t reduced it since. It is also worth noting that Apple paid a dividend from 1987 until 1995 worth 1/10th of a cent. That dividend is now 23 cents per share and has grown by 8.2% over the past five years.
Like Microsoft, investing in Apple is a bet that flagging tech giants will rebound and reward current investors handsomely. Apple’s Q1 revenues fell 5%, which has signaled that demand may be shrinking as consumers buckle down in the currently volatile economy. As consumers appear less likely to shell out large sums for iPhones, the company is leaning on services where revenues hit an all-time high of $20.8 billion.
Oracle (NYSE:ORCL) stock represents a multinational technology company that provides database and enterprise software products and services along with cloud services. The company is known for its range of software solutions for business, supply chain, and human resources management. Oracle is also investing heavily in cloud services, focusing on helping customers and enterprises move their workloads to the cloud.
In regards to dividends, Oracle has paid a dividend that has gone unreduced since its inception in 2009. It currently yields 1.46% and has grown 14% over the past five years.
Wall Street expects mid-term growth from Oracle and has assigned its a consensus $95 stock price target. ORLC shares currently trade for $87.
Oracle’s revenues increased by 18% in 2022, suggesting that long-term growth shouldn’t be a problem. Net income did decrease, however, falling by 12% during the period. Oracle is also a significant force in the cloud and is spending heavily to lure customers away from bigger tech companies in the space.
Qualcomm (NASDAQ:QCOM) Qualcomm is another semiconductor stock that includes a dividend. The company has benefited from the growth of smartphones and 5G technology. It is a noted supplier of Apple, so as Apple shifts toward in-house chip production, investors have grown skeptical of Qualcomm’s prospects.
The company’s most recent earnings do little to assuage those concerns, with revenues that declined by 12% to $9.46 billion. However, those results were in line with management’s expectations.
However, there is reason to believe in Qualcomm moving forward. Apple is unlikely to move away from Qualcomm as a supplier until late 2024 at the earliest. Apple’s efforts to develop in-house chip production have not gone to plan, as the company was hoping to bring production in-house this year. That leaves the door open for Qualcomm while it continues to grow in other areas. In particular, IoT and automotive, where revenues increased by 7% and 58% YoY in the latest quarter.
On the date of publication, Alex Sirois did not have (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.
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