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Like Dividends? 3 Tech Titans Paying Investors Handsomely
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Dividends provide a magnificent boost to portfolios, coming with many significant perks.
Investors can achieve maximum returns through dividend reinvestment, dividends alleviate drawdowns in other positions, and they provide more than one way to profit from an investment.
When thinking of dividends, REITs, Utilities, or Basic Materials are all areas that undoubtedly come to the front of many minds.
However, several technology stocks – Broadcom (AVGO - Free Report) , Microsoft (MSFT - Free Report) , and Texas Instruments (TXN - Free Report) – pay investors handsomely and carry rock-solid dividend growth metrics.
Below is a chart illustrating the year-to-date performance of all three stocks with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
As we can see, it’s been anything but fun for technology stocks in 2022, with a hawkish Fed spoiling the fun all year long.
Still, the adverse price action has caused valuation levels to drop significantly, perhaps enticing long-term investors.
Let’s take a deeper dive into each one.
Broadcom
Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices.
AVGO’s dividend metrics would thrill any income-focused investor seeking tech exposure; the company carries a 3.8% annual dividend yield paired with a stellar 26.3% five-year annualized dividend growth rate.
The company pays out 51% of its earnings.
Image Source: Zacks Investment Research
Broadcom posted a quarterly free cash flow of a rock-solid $4.3 billion in its latest quarter, reflecting a 4% sequential increase and an even more significant 26% Y/Y increase.
AVGO has a very favorable free cash flow trend, as seen in the chart below.
Image Source: Zacks Investment Research
For the cherry on top, Broadcom’s valuation levels have fallen into a potential sweet spot for long-term investors – the company’s 12.5X forward earnings multiple is well below its 16.6X five-year median.
Image Source: Zacks Investment Research
Texas Instruments
Texas Instruments is an original equipment manufacturer of analog, mixed-signal, and digital signal processing (DSP) integrated circuits.
TXN pays shareholders handsomely; the company’s annual dividend yield of 3% hardly compares to its Zacks Sector average.
Impressively, the company has upped its dividend payout six times over the last five years with a double-digit 15.7% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Texas Instrument shares are cheap relative to where they’ve traded in the past; TXN’s 16.2X forward earnings multiple is nowhere near its 22.9X five-year median and highs of 29.5X in 2021.
Image Source: Zacks Investment Research
Microsoft
Microsoft is one of the largest broad-based technology providers in the world, dominating the PC software market with more than 80% of the market share for operating systems.
MSFT’s annual dividend yield comes in at 1.1%, a tick above its Zacks Computer and Technology sector average of 1.0%.
Still, the company has been dedicated to growing its dividend; Microsoft has upped its payout six times over the last five years, translating to a substantial 10% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
The company is a cash-generating machine - MSFT posted quarterly free cash flow of a steep $17.8 billion in its latest quarter, reflecting Y/Y growth of nearly 10%.
Image Source: Zacks Investment Research
MSFT’s forward earnings multiple of 22.3X is undoubtedly sitting near the higher end of the spectrum. Still, the value is significantly below its 28.5X five-year median and nearly half of 2021 highs of 37.5X.
Image Source: Zacks Investment Research
Bottom Line
Investors love dividends, and for very valid reasons. They provide a cushion to drawdowns in other positions and give shareholders another way to reap a return from their investment.
When thinking of dividends, REITs, Utilities, or Basic Materials are all areas that undoubtedly come to the front of many minds.
However, all three technology stocks above – Broadcom (AVGO - Free Report) , Microsoft (MSFT - Free Report) , and Texas Instruments (TXN - Free Report) – pay investors handsomely and have seen their valuation levels pull back extensively amid the Fed’s tightening cycle.
For those with a long-term horizon seeking tech exposure paired with dividend payouts, all three deserve serious consideration.
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Like Dividends? 3 Tech Titans Paying Investors Handsomely
Dividends provide a magnificent boost to portfolios, coming with many significant perks.
Investors can achieve maximum returns through dividend reinvestment, dividends alleviate drawdowns in other positions, and they provide more than one way to profit from an investment.
When thinking of dividends, REITs, Utilities, or Basic Materials are all areas that undoubtedly come to the front of many minds.
However, several technology stocks – Broadcom (AVGO - Free Report) , Microsoft (MSFT - Free Report) , and Texas Instruments (TXN - Free Report) – pay investors handsomely and carry rock-solid dividend growth metrics.
Below is a chart illustrating the year-to-date performance of all three stocks with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
As we can see, it’s been anything but fun for technology stocks in 2022, with a hawkish Fed spoiling the fun all year long.
Still, the adverse price action has caused valuation levels to drop significantly, perhaps enticing long-term investors.
Let’s take a deeper dive into each one.
Broadcom
Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices.
AVGO’s dividend metrics would thrill any income-focused investor seeking tech exposure; the company carries a 3.8% annual dividend yield paired with a stellar 26.3% five-year annualized dividend growth rate.
The company pays out 51% of its earnings.
Image Source: Zacks Investment Research
Broadcom posted a quarterly free cash flow of a rock-solid $4.3 billion in its latest quarter, reflecting a 4% sequential increase and an even more significant 26% Y/Y increase.
AVGO has a very favorable free cash flow trend, as seen in the chart below.
Image Source: Zacks Investment Research
For the cherry on top, Broadcom’s valuation levels have fallen into a potential sweet spot for long-term investors – the company’s 12.5X forward earnings multiple is well below its 16.6X five-year median.
Image Source: Zacks Investment Research
Texas Instruments
Texas Instruments is an original equipment manufacturer of analog, mixed-signal, and digital signal processing (DSP) integrated circuits.
TXN pays shareholders handsomely; the company’s annual dividend yield of 3% hardly compares to its Zacks Sector average.
Impressively, the company has upped its dividend payout six times over the last five years with a double-digit 15.7% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Texas Instrument shares are cheap relative to where they’ve traded in the past; TXN’s 16.2X forward earnings multiple is nowhere near its 22.9X five-year median and highs of 29.5X in 2021.
Image Source: Zacks Investment Research
Microsoft
Microsoft is one of the largest broad-based technology providers in the world, dominating the PC software market with more than 80% of the market share for operating systems.
MSFT’s annual dividend yield comes in at 1.1%, a tick above its Zacks Computer and Technology sector average of 1.0%.
Still, the company has been dedicated to growing its dividend; Microsoft has upped its payout six times over the last five years, translating to a substantial 10% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
The company is a cash-generating machine - MSFT posted quarterly free cash flow of a steep $17.8 billion in its latest quarter, reflecting Y/Y growth of nearly 10%.
Image Source: Zacks Investment Research
MSFT’s forward earnings multiple of 22.3X is undoubtedly sitting near the higher end of the spectrum. Still, the value is significantly below its 28.5X five-year median and nearly half of 2021 highs of 37.5X.
Image Source: Zacks Investment Research
Bottom Line
Investors love dividends, and for very valid reasons. They provide a cushion to drawdowns in other positions and give shareholders another way to reap a return from their investment.
When thinking of dividends, REITs, Utilities, or Basic Materials are all areas that undoubtedly come to the front of many minds.
However, all three technology stocks above – Broadcom (AVGO - Free Report) , Microsoft (MSFT - Free Report) , and Texas Instruments (TXN - Free Report) – pay investors handsomely and have seen their valuation levels pull back extensively amid the Fed’s tightening cycle.
For those with a long-term horizon seeking tech exposure paired with dividend payouts, all three deserve serious consideration.