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Dividends: 3 Tech Stocks for Income Investors to Buy
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With tech’s massive run in 2023, many are undoubtedly seeking exposure to the sector. Income-focused investors do not commonly target technology stocks, as it’s common for these companies to utilize cash to fuel growth.
However, it could surprise some that plenty of technology companies also reward their investors handsomely.
And several of them, including NetEase (NTES - Free Report) , NXP Semiconductors (NXPI - Free Report) , and Applied Materials (AMAT - Free Report) , have been committed to growing their payouts.
For income-focused investors interested in exposure to technology, let’s take a deeper dive into each.
Applied Materials
Applied provides manufacturing equipment, services, and software to the semiconductor, display, and other related industries. The stock is a Zacks Rank #2 (Buy), with earnings expectations increasing nicely across all timeframes.
Image Source: Zacks Investment Research
AMAT shares currently yield 0.9% annually paired with a sustainable payout ratio sitting at 13% of the company’s earnings. Growth is there, too, with the payout growing by 6.5% over the last five years.
The company’s cash flow remains solid, with reported free cash flow of $2.1 billion in its latest quarter improving nearly 3% from the year-ago period.
Image Source: Zacks Investment Research
Shares may not entice value-conscious investors, with the current 19.8X forward earnings multiple sitting above the 15.9X five-year median. The stock carries a Style Score of “C” for Value.
NXP Semiconductors
NXP Semiconductors is a global semiconductor company providing high-performance mixed signal and standard product solutions used in various applications. Analysts have modestly raised their earnings expectations across all timeframes, helping land the stock into a Zacks Rank #2 (Buy).
Income investors will undoubtedly enjoy NXPI’s 40% five-year annualized dividend growth rate, reflecting a notable commitment to increasingly rewarding shareholders. Shares currently yield 1.9% annually paired with a sustainable 29% payout ratio.
Image Source: Zacks Investment Research
The company’s growth is forecasted to slow in its current fiscal year (FY23), with estimates indicating a 15% drop in earnings on 2.3% lower revenues. Still, growth resumes in FY24, with expectations calling for 8% EPS growth on nearly 6% higher sales.
NXP Semiconductors has been a consistent earnings performer, exceeding both EPS and revenue expectations in ten consecutive quarters. Just in its latest release, NXPI delivered a 5% earnings beat and reported revenue 4% ahead of expectations.
Image Source: Zacks Investment Research
NetEase
NetEase is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. Similar to those above, analysts have taken a bullish stance on the company’s earnings outlook, pushing the stock into a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Impressively, NetEase sports a 26% five-year annualized dividend growth rate, owing to its shareholder-friendly nature. Shares currently yield 1.7% annually, nearly double that of its Zacks Industry average.
In addition, shares are cheap on a relative basis, with the current 18.2X forward earnings multiple sitting nicely beneath the 26.8X five-year median and the Zacks Industry average. Shares have traded as high as 38.2X over the last five years.
Image Source: Zacks Investment Research
Bottom Line
While income investors don’t commonly target the tech sector, the sector’s massive run in 2023 could cause some to change their minds.
And for those interested in exposure to the sector paired with a steady income stream, all three above – NetEase (NTES - Free Report) , NXP Semiconductors (NXP - Free Report) , and Applied Materials (AMAT - Free Report) – fit the criteria.
All three have seen their near-term earnings outlooks drift higher and have grown their payouts nicely over the years.
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Dividends: 3 Tech Stocks for Income Investors to Buy
With tech’s massive run in 2023, many are undoubtedly seeking exposure to the sector. Income-focused investors do not commonly target technology stocks, as it’s common for these companies to utilize cash to fuel growth.
However, it could surprise some that plenty of technology companies also reward their investors handsomely.
And several of them, including NetEase (NTES - Free Report) , NXP Semiconductors (NXPI - Free Report) , and Applied Materials (AMAT - Free Report) , have been committed to growing their payouts.
For income-focused investors interested in exposure to technology, let’s take a deeper dive into each.
Applied Materials
Applied provides manufacturing equipment, services, and software to the semiconductor, display, and other related industries. The stock is a Zacks Rank #2 (Buy), with earnings expectations increasing nicely across all timeframes.
Image Source: Zacks Investment Research
AMAT shares currently yield 0.9% annually paired with a sustainable payout ratio sitting at 13% of the company’s earnings. Growth is there, too, with the payout growing by 6.5% over the last five years.
The company’s cash flow remains solid, with reported free cash flow of $2.1 billion in its latest quarter improving nearly 3% from the year-ago period.
Image Source: Zacks Investment Research
Shares may not entice value-conscious investors, with the current 19.8X forward earnings multiple sitting above the 15.9X five-year median. The stock carries a Style Score of “C” for Value.
NXP Semiconductors
NXP Semiconductors is a global semiconductor company providing high-performance mixed signal and standard product solutions used in various applications. Analysts have modestly raised their earnings expectations across all timeframes, helping land the stock into a Zacks Rank #2 (Buy).
Income investors will undoubtedly enjoy NXPI’s 40% five-year annualized dividend growth rate, reflecting a notable commitment to increasingly rewarding shareholders. Shares currently yield 1.9% annually paired with a sustainable 29% payout ratio.
Image Source: Zacks Investment Research
The company’s growth is forecasted to slow in its current fiscal year (FY23), with estimates indicating a 15% drop in earnings on 2.3% lower revenues. Still, growth resumes in FY24, with expectations calling for 8% EPS growth on nearly 6% higher sales.
NXP Semiconductors has been a consistent earnings performer, exceeding both EPS and revenue expectations in ten consecutive quarters. Just in its latest release, NXPI delivered a 5% earnings beat and reported revenue 4% ahead of expectations.
Image Source: Zacks Investment Research
NetEase
NetEase is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. Similar to those above, analysts have taken a bullish stance on the company’s earnings outlook, pushing the stock into a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Impressively, NetEase sports a 26% five-year annualized dividend growth rate, owing to its shareholder-friendly nature. Shares currently yield 1.7% annually, nearly double that of its Zacks Industry average.
In addition, shares are cheap on a relative basis, with the current 18.2X forward earnings multiple sitting nicely beneath the 26.8X five-year median and the Zacks Industry average. Shares have traded as high as 38.2X over the last five years.
Image Source: Zacks Investment Research
Bottom Line
While income investors don’t commonly target the tech sector, the sector’s massive run in 2023 could cause some to change their minds.
And for those interested in exposure to the sector paired with a steady income stream, all three above – NetEase (NTES - Free Report) , NXP Semiconductors (NXP - Free Report) , and Applied Materials (AMAT - Free Report) – fit the criteria.
All three have seen their near-term earnings outlooks drift higher and have grown their payouts nicely over the years.