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3 Tech Stocks That Hiked Dividend on Solid Quarterly Earnings

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With a gradual resumption of normal business activities that were largely suspended due to the coronavirus-induced lockdown restrictions, the technology sector has witnessed a steady revival of sorts. Despite supply chain woes related to continued chip shortage and spread of the Omicron variant, the industry seemed to have benefited from higher demand for scalable infrastructure for seamless connectivity amid a wide proliferation of IoT devices. A steady pace of 5G deployment and investments by leading carriers to upgrade their network infrastructure and increase their fiber footprint to meet the growing demand for flexible data, video, voice and IP solutions also seemed to have driven a healthy quarterly performance for the sector.  

However, the demand-supply imbalance owing to an acute shortage of chips, which are the building blocks for various technological equipment, has largely affected the profitability of companies due to inflated equipment prices. In order to weed off the liquidity crisis, various firms resorted to cost-cutting measures such as furloughs, layoffs and reduction in discretionary expenses. Some other firms looked beyond the short-term funding avenues, such as revolving lines of bank credit, to bridge temporary cash shortfalls. Some others have employed dividend cut or suspension of dividend payment until the overall situation improved. Although a bulk of the firms across diverse sectors has increasingly followed the drift, a handful has chosen to swim against the tide and continue rewarding shareholders with dividend hikes.

Let us dig deep into three such tech stocks to gauge the underlying metrics that reflect their inherent financial strengths.

Universal Display Corporation (OLED - Free Report) : Ewing, NJ-based Universal Display Corporation is a leading developer of technology and intellectual property for the Organic Light Emitting Diodes market. The company recently hiked its quarterly dividend by 50% year over year to 30 cents per share. The current hike reflects the inherent financial strength of the company and strong cash flow driven by the healthy execution of operating plans. Since the inception of its dividend payout, the company has steadily increased its dividend to reward its shareholders with a healthy risk-adjusted return. Universal Display’s solid debt-free balance sheet and liquidity position is noteworthy. As of Dec 31, 2021, it had cash and cash equivalents of $312 million and $120.9 million of current deferred revenues. In 2021, the company generated $191.1 million of cash from operating activities compared with $148.8 million in 2020.

The commercial introduction of the full-color emissive stack is likely to enable Universal Display to unlock a vast array of opportunities for higher energy efficiency and performance across a broad range of Organic Light Emitting Diodes applications. We believe strong end-market demand in a number of industries, including smartphones, television, virtual reality devices and automotive markets, presents a significant growth opportunity for Universal Display over the long term.

Universal Display reported healthy fourth-quarter 2021 results with earnings of 96 cents per share, which beat the Zacks Consensus Estimate by 2.1%. Fourth-quarter total revenues grew 3.3% year over year to $146.2 million, driven by solid demand trends. The top line surpassed the Zacks Consensus Estimate by 3.4%. Universal Display currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Juniper Networks, Inc. (JNPR - Free Report) : Based in Sunnyvale, CA, Juniper is a leading provider of networking solutions and communication devices. The company recently hiked its quarterly dividend by 5% year over year to 21 cents per share. Over the years, the company has maintained a steady dividend payout and increased it periodically. In 2021, Juniper generated $689.7 million of cash from operating activities compared with $612 million in 2020. As of Dec 31, 2021, the company had $922.5 million in cash and cash equivalents with $1,686.8 million of long-term debt.

Juniper is witnessing strong momentum across its core industry verticals and is confident of its long-term prospects. Investments in customer solutions and sales organizations have enabled the company to capitalize on the solid demand across end markets. The company continues to resolve supply chain challenges and increase inventory levels to limit disruptions. It is witnessing encouraging trends across various areas of its business, including solid momentum in Mist Systems and strength in the services organization. It has made significant changes to the go-to-market structure to better align sales strategies to each of its core customer verticals.

Juniper reported healthy fourth-quarter 2021 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate. Quarterly non-GAAP net income was $184.7 million or 56 cents per share compared with $181.8 million or 55 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents. Despite the challenging supply chain environment, Juniper’s quarterly revenues increased to $1,299.9 million from $1,222.6 million in the prior-year quarter, driven by strong demand. The company witnessed double-digit order growth across verticals, customer solutions and regions. The top line beat the consensus estimate of $1,272 million. Juniper currently carries a Zacks Rank #3 (Hold).

Cogent Communications Holdings, Inc. (CCOI - Free Report) : Headquartered in Washington, DC, Cogent is a Tier 1 Internet Service Provider that offers low-cost high-speed Internet access, private network services and colocation center services with ultra-low latency data transmission. The company recently increased its dividend for the 38th consecutive quarter. It hiked its quarterly dividend by 2.5 cents per share to 85.5 cents for the first quarter of 2022. In 2021, Cogent generated $170.3 million of net cash from operating activities compared with $140.3 million in the year-ago period. As of Dec 31, 2021, the company had $319.6 million in cash and cash equivalents with $17 million of finance lease obligations.

Being a leading provider of high-speed Internet access, Cogent benefits from cost-effective operations. The company offers a streamlined set of products, which help in eliminating redundant costs and give greater pricing flexibility. It incurs relatively lower costs compared with competitors owing to the usage of Internet routers without additional legacy equipment. Backed by efficient network expansion and integration execution, it also offers high-quality Internet service due to the highly economical metro and intercity network infrastructure. Its seamless network delivers high throughput, which reduces the frequency of data packets dropped during transmission compared with traditional circuit-switched networks, thereby creating more reliable and robust network infrastructure.

Cogent reported relatively healthy fourth-quarter 2021 results, wherein the bottom line surpassed the Zacks Consensus Estimate on top-line growth. Adjusted net income in the quarter was 24 cents per share, which beat the Zacks Consensus Estimate by 4 cents. Quarterly service revenues increased to $147.2 million from $143.9 million in the year-ago quarter, driven by higher on-net revenues. Top-line expansion on the back of higher on-net revenues and accretive customer connections drove the quarterly performance. Cogent currently carries a Zacks Rank #4 (Sell).


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