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The technology sector is generally associated with growth stocks. Many technology stocks do not pay dividends, although this has begun to change over the past several years. The NASDAQ 100 list now contains many quality dividend stocks with strong yields. This article will discuss 3 blue-chip tech stocks that pay dividends, and have the ability to grow their dividends every year.
Broadcom Inc. (AVGO)
Broadcom designs, develops and sells semiconductors under the following business units: Wired infrastructure, wireless communication, enterprise storage and industrial. Its offerings include data center chips, factory automation, energy systems and power generation, broadband access, and home connectivity. Broadcom is a fabless semiconductor company, which means that the products it designs are manufactured by other companies/foundries.Broadcom reported its first quarter earnings results on March 7. The company generated revenues of $12.0 billion during the quarter, which represents an increase of 34% compared to the prior year’s quarter. The strong revenue growth performance was driven by AI data center investments by many of Broadcom’s customers. The company outperformed revenue expectations easily.Broadcom reported earnings-per-share of $10.99 for the fiscal first quarter, which was ahead of the analyst consensus estimate. The company expects that revenues will come in at around $50 billion during the current fiscal year, which would represent a nice revenue increase compared to the previous year.Broadcom’s biggest market is wireless communication, where the company owns a strong connectivity portfolio that includes advanced LTE, Bluetooth 5.x, Wi-Fi, GNSS (GPS, Galileo, etc.), and more. It is also well positioned in the enterprise storage market, where it provides switching and other connectivity solutions and storage products such as SSD controllers.Between 2010 and 2021, Broadcom increased its dividend by an incredible factor of more than 100. Broadcom’s dividend still looks relatively safe, however, as it is well-covered by both profits as well as by cash flows. Shares currently yield 1.1%.
Cisco Systems (CSCO)
Cisco Systems is the global leader in high performance computer networking systems. The company’s routers and switches allow networks around the world to connect to each other through the internet. Cisco also offers data center, cloud, and security products.On March 18th, 2024, Cisco completed its $28 billion purchase of cybersecurity company Splunk. On May 15th, 2024, Cisco announced results for the third quarter of fiscal year 2024. For the quarter, revenue declined 12.8% to $12.7 billion, but this was $70 million ahead of estimates.Adjusted earnings-per-share of $0.88 compared unfavorably to adjusted earnings-per-share of $1.00 in the prior year, but this was $0.06 more than anticipated. This was the first quarter that included the company’s acquisition of Splunk, which contributed $4.3 billion to the annualized recurring revenue total of $29.2 billion. For the most recent quarter, Networking fell 27%, Security grew by 36%, Collaboration was flat, and Observability was improved 27%.Cisco repurchased 26 million shares at an average price of $49.22 during the quarter. The company’s remaining share repurchase authorization is $7.2 billion, or 3.7% of the current market cap.Cisco provided an updated outlook for fiscal year 2024 as well, with the company now expecting revenue in a range of $53.6 billion to $53.8 billion, compared to $51.5 billion to $52.5 billion, $53.8 billion to $55 billion, and $57 billion to $58.2 billion previously.Cisco is in a prime position to capitalize on the Internet of Things. In fact, Cisco is responsible for 80% of all the data moved over the internet in the past 30+ years. While Cisco continues to enjoy hardware dominance, the company is attempting to become more of a subscription services company. This should help create more predictable revenue streams.CSCO stock currently yields 3.5%.
Texas Instruments (TXN)
Texas Instruments is a semiconductor company that operates two business units: Analog and Embedded Processing. Its products include semiconductors that measure sound, temperature and other physical data and convert them to digital signals, as well as semiconductors that are designed to handle specific tasks and applications.Texas Instruments reported its first quarter earnings results on April 23. During the quarter Texas Instruments generated revenues of $3.66 billion, which represents a decline of 16% versus the previous year’s quarter. This beat analyst estimates by $50 million, as the analyst community had forecasted an even bigger revenue decline.Texas Instruments managed to keep its gross profit margin at a very solid level of 57%, but due to operating leverage working against the company, its operating profit margin declined to 35%.Texas Instruments generated earnings-per-share of $1.10 during the first quarter, which was better than the consensus estimate, coming in $0.02 ahead of the analyst community’s forecast. Thanks to its cash generation, Texas Instruments was able to finance shareholder returns of $4.8 billion during the last four quarters.Texas Instruments’ dividend payout ratio has risen over the last decade, but the dividend still looks relatively safe, as Texas Instruments generates vast free cash flows, of which it pays out roughly half in dividends. The company has increased its dividend for 20 consecutive years. TXN shares currently yield 2.6%.More By This Author:High Dividend 50 – Washington Trust Bancorp
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