These tech dividend stocks offer 3% or more in yield.
When it comes to tech stocks, big-name Silicon Valley companies tend to get all the attention thanks to their powerful consumer brands. However, investors who are after regular dividend payments may be better off looking beyond the usual suspects that pay rather insignificant yields — that is, if they even pay dividends at all. The following seven tech dividend stocks all offer yields of 3% or more — compared with the current yield of the S&P 500 of roughly 1.4% — allowing investors an opportunity to play this high-growth sector in a way that provides generous income potential.
Broadcom (ticker: AVGO)
Boasting a roughly $200 billion market capitalization, the current incarnation of this company was formed when Broadcom and Avago teamed up in a $37 billion deal to join the two major semiconductor stocks at the beginning of 2016. As has been the case elsewhere with pricey deals between chipmakers, the idea was to consolidate operations and create economies of scale that these two communications hardware providers couldn’t enjoy on their own. By all accounts the deal was a big success, as evidenced by the fact that shares are up nearly 300% since the merger. Broadcom’s dividend has more than tripled from $1.02 per share each quarter in 2017 to $3.60, at the time of this writing.
Current yield: 3.13%
Chipmos Technologies (IMOS)
Though certainly not a household name, the $1 billion Chipmos is a Taiwanese semiconductor company that manufactures chips but also provides precision assembly and testing services to third parties. Needless to say, you can waste a lot of money if you’re a chipmaker cranking out semiconductors that don’t do what they should, so IMOS’ services are very much a necessary part of the modern technology supply chain. The margins aren’t as impressive as designing flashy consumer hardware. But they are much more reliable and help support a generous annual dividend. Its current yield is based on July 2020’s distribution, so if these levels hold, now is a great time to dive into this tech dividend stock.
Current yield: 3.45%
Hewlett Packard Enterprise Co. (HPE)
Most investors probably recognize the Hewlett Packard brand. It’s important to note that HPE is not the inkjet printer and laptop company you may be most familiar with. After a 2014 restructuring, HP (HPQ) took over this consumer-facing line of products, while HPE dedicated itself to data infrastructure and enterprise technology services. It’s this second company that dividend investors should be interested in, partially because it has a bigger dividend but also because it’s not as exposed to the ups and downs of consumer tech and spending trends. It’s also worth noting that while earnings per share are projected to hit $1.92 next fiscal year, dividends are running at a rate of just 48 cents annually — and there’s ample room to increase that already generous payout.
Current yield: 3%
IBM (IBM)
“Big Blue” is an iconic tech stock that is in many ways the predecessor to modern dividend payers in this space. The company was founded more than 100 years ago as a mechanized tabulation company, joined the Dow Jones Industrial Average for the first time in 1932 and has decades of dividend payments under its belt. Clearly, this is not a company that was started by a 20-something in their garage. However, it’s fair to say IBM hasn’t always been on the cutting edge and has had its challenges fending off new upstarts and adapting to disruptive trends. That said, IBM is still a $127 billion company with a rich history and deep relationships with its customers. It’s also very profitable, supporting a generous and sustainable dividend of $1.63 per quarter, which is only about two-thirds of earnings.
Current yield: 4.54%
Juniper Networks (JNPR)
Juniper’s core business of networking switches, router and security solutions isn’t particularly dramatic when you compare it with high-growth tech stocks developing the next generation of consumer products. It’s also, frankly, not competing at the scale of its larger rival Cisco Systems (CSCO). However, its revenue is rising steadily and analysts continue to project growth into the future thanks in particular to the growth of its cloud-computing division. With a market cap of $8 billion and a 20-cent quarterly dividend that is only about half of its earnings, this hardware company has a secure payout that investors can rely on.
Current yield: 3.13%
NVE Corp. (NVEC)
Another semiconductor service provider, NVE Corp. develops “spintronics” applications, a nanotechnology that relies on electron spin to acquire, store and transmit information. In short, rather than using the charge of an electron to encode data, spintronic devices instead use the intrinsic momentum of the electron. A few applications for this technology include sensors in medical devices or for use in monitoring power grids. Though a small and specialized company valued at around $330 million at present, NVEC has delivered regular payouts of $1 per quarter since 2015 and is among the highest-yielding tech dividend stocks on this list.
Current yield: 5.74%
Seagate Technology (STX)
Seagate is a favorite among some dividend stock investors thanks to its reliable operations. The hard disk manufacturer is admittedly seeing pressures from the move to cloud-based technology, as well as the steady downward spiral of the cost of storage for consumers that continues to put pressure on margins. But the fact is all that data on the cloud has to live somewhere, and while PCs have admittedly been replaced by smartphones in many cases, they remain indispensable in some areas. With projected earnings of $6.12 next fiscal year, STX is comfortably profitable and has actually outperformed the S&P 500 over the last 12 months despite this old-school hardware focus. With current dividend payments at less than half that amount of projected earnings per share, there’s no danger to the dividend either.
Current yield: 3.2%
Tech stocks with great dividends:
— Broadcom (AVGO)
— Chipmos Technologies (IMOS)
— Hewlett Packard Enterprise Co. (HPE)
— IBM (IBM)
— Juniper Networks (JNPR)
— NVE Corp. (NVEC)
— Seagate Technology (STX)
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7 of the Best Tech Dividend Stocks originally appeared on usnews.com
Update 04/22/21: This story was published previously and has been updated with new information.
