The technology sector has witnessed healthy demand trends in 2023 with an accelerated pace of 5G deployment and increased fiber densification. Despite a challenging macroeconomic environment owing to geopolitical conflicts, inflationary pressures and uncertain business conditions, the industry seemed to have benefited from a higher demand for scalable infrastructure for seamless connectivity amid a wide proliferation of IoT devices.

Steady 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 buoyed the sector.  

However, demand-supply imbalance and volatility in raw material prices owing to a shortage of chips, which are the building blocks for various technological equipment, have 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 cuts or suspension of dividend payments 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.

These stocks have a strong history of dividend growth, which portrays that they are primarily mature companies that are less susceptible to large swings in the market. Consequently, these stocks largely act as a hedge against economic or political uncertainty as well as stock market volatility and offer downside protection with their consistent increase in payouts.

Additionally, these stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, healthy liquidity, a strong balance sheet and some value characteristics. Further, a history of strong dividend growth indicates that a dividend increase is likely in the future.

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

Motorola Solutions, Inc. (MSI Quick QuoteMSI - Free Report) : Based in Chicago, IL, Motorola is a leading communications equipment manufacturer and has strong market positions in bar code scanning, wireless infrastructure gear and government communications. The company recently announced an 11% year-over-year hike in its quarterly dividend payout to 98 cents per share or $3.92 on an annualized basis.

A steady dividend payout is part of the long-term strategy of Motorola to provide attractive risk-adjusted returns to its stockholders. In addition, healthy dividend increases at periodic intervals have been one of its strengths. Management further increased its share repurchase authorization by an additional $2 billion to $18 billion.

Motorola is poised to gain from robust organic growth, disciplined capital deployment and strong demand across land mobile radio products, services and software. As the public safety market continues to embrace software offerings to enhance workflows, Motorola is able to sell cloud-first SaaS offerings in addition to on-premise solutions with ancillary implementation and managed services. The company is expanding its software offerings to provide solutions across the various segments of the public safety workflow.

This Zacks Rank #3 (Hold) stock has a long-term earnings growth expectation of 9.9% and gained 21.1% over the past year. It delivered an earnings surprise of 6%, on average, in the trailing four quarters. The Zacks Consensus Estimate for current-year earnings for Motorola has been revised 5.4% upward over the past year.

Qualcomm Incorporated (QCOM Quick QuoteQCOM - Free Report) : Headquartered in San Diego, CA, Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. It has increased its quarterly dividend payout to 80 cents per share or $3.20 on an annualized basis. The hike reflects the inherent financial strength of the company and the strong cash flow generated from continued focus on high-margin businesses and healthy execution of operating plans.

Qualcomm generated $4,090 million of net cash from operating activities in the fiscal fourth quarter compared with $1,446 million a year ago, bringing the respective tallies for fiscal 2023 and fiscal 2022 to $11,299 million and $9,096 million. At fiscal-end, the company had $8,450 million in cash and cash equivalents.

The company is well-positioned to benefit from solid 5G traction with greater visibility and a diversified revenue stream to meet its long-term revenue targets. Qualcomm is witnessing strong demand in emerging product categories such as XR and wearables, along with 4G and 5G mobile broadband devices and rapid adoption of Wi-Fi 6. It is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge.

It has a long-term earnings growth expectation of 12.5% and gained 22.6% over the past year. It delivered an earnings surprise of 2.2%, on average, in the trailing four quarters. Qualcomm carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Universal Display Corporation (OLED Quick QuoteOLED - Free Report) : Ewing, NJ-based Universal Display is a leading developer of technology and intellectual property for the Organic Light Emitting Diodes (OLED Quick QuoteOLED - Free Report) market. The company recently hiked its quarterly dividend payout by about 16.7% to 35 cents per share or $1.40 on an annualized basis. Universal Display’s solid debt-free balance sheet and liquidity position are noteworthy. As of Sep 30, 2023, it had cash and cash equivalents of $79.3 million and generated $117.7 million cash from operating activities in the first nine months of 2023.

The increasing proliferation of smartphones, wearables and tablets is driving the adoption of small-area OLEDs. Large-area OLED displays are increasingly used in televisions. Universal Display’s dominance in OLED technology is primarily driven by its strong portfolio of around 5,500 patents worldwide. The company’s UniversalPHOLED phosphorescent OLED technology produces OLEDs that are four times more efficient than fluorescent OLEDs and significantly more efficient than current LCDs. This provides Universal Display with a competitive advantage over other OLED makers.

This Zacks Rank #3 stock has a long-term earnings growth expectation of 16.4% and gained 68.7% over the past year. It delivered an earnings surprise of 23.8%, on average, in the trailing four quarters.

Broadcom Inc. (AVGO Quick QuoteAVGO - Free Report) : Headquartered in San Jose, CA, Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor-based devices and analog III-V-based products. The company recently raised its quarterly dividend by 14% to $5.25 per share for fiscal 2024. Broadcom generated $18,085 million of net cash from operating activities in fiscal 2023 compared with $16,736 million in fiscal 2022. At fiscal-end, the company had $14,189 million in cash and cash equivalents.

Broadcom has been benefiting from the strong deployment of generative AI by hyperscalers, service providers and enterprises. It expects generative AI to contribute more than 25% of semiconductor revenues in fiscal 2024 compared with an estimated 15% in fiscal 2023 and roughly 10% in fiscal 2022.

This Zacks Rank #3 stock has a long-term earnings growth expectation of 12.6% and gained 97.9% over the past year. It delivered an earnings surprise of 1.4%, on average, in the trailing four quarters. The Zacks Consensus Estimate for current-year earnings for Broadcom has been revised 8.4% upward over the past year.

ATN International, Inc. (ATNI Quick QuoteATNI - Free Report) : Headquartered in Beverly, MA, ATN International offers digital infrastructure and communications services with a focus on rural and remote markets. The company recently announced a 14% year-over-year hike in its quarterly dividend payout to 24 cents per share or 96 cents on an annualized basis. Management further increased its share repurchase authorization to $25 million. This portrays management’s confidence in generating strong cash flow for sustainable growth across its markets. The balanced capital allocation strategy further signifies the prudent investment decisions and healthy debt position of the company.

The company is in the final stages of this three-year expansion plan that started in 2022. This aims to develop a highly resilient customer base and a steady revenue stream on the back of relatively short-term increases in capital expenditures. In order to accomplish this goal, the company is investing in an elevated class of connectivity to expand its market position, which bodes well for the consistency and durability of future cash flows.

It has a VGM Score of A. ATN International currently carries a Zacks Rank #3.