Tech stocks have been unpredictable at times recently, but the sector has proven it can rebound from volatility strongly, and there is no question that tech has been the leader of the market’s strong multiyear run up to this point.
However, this might mean that income investors—those focused on finding companies with solid dividends—might be feeling left out, as tech stocks aren’t really known for their payouts.
Finding a strong dividend-yielding tech stock might feel like searching for a golden goose, but investors should not feel too intimidated. In fact, dividend-focused investors can search for the best tech stocks by using the Zacks Stock Screener, the perfect one-stop screening tool for investors of all kinds.
By limiting our search to companies in our “Computer and Technology” sector with Zacks Rank #2 (Buy) or better rankings, we can ensure that we are finding the highest quality stocks to buy right now. Throw in your preferred dividend yield and voila—the best tech stocks for dividend investors to target!
Check out three of these stocks to buy now:
1. Garmin Ltd. (GRMN - Free Report)
Garmin is a designer of GPS navigation and wearable technology equipment. The stock is holding a Zacks Rank #2 (Buy) and presents a dividend yield of about 3.3%. Investors have to pay a slight premium for GRMN right now, but a valuation of 19x forward earnings and a PEG ratio of 2.5 are certainly not outrageous.
Meanwhile, Garmin generates $3.42 in cash per share and sticks out from the rest of the technology group with its net margin of 19.5%, which dramatically outpaces its industry’s average. Garmin is also an efficient company, evidenced by its RoE of 17%.
2. Qualcomm Incorporated (QCOM - Free Report)
Qualcomm is one of the world’s largest telecommunications equipment and semiconductor manufacturing companies in the world. QCOM currently sports a Zacks Rank #1 (Strong Buy) and has a dividend yield of 4.5%. Management has a great track record of adding to the payout and has hiked the dividend annually since 2009.
Chip stocks have been volatile, but Qualcomm offers exposure to different businesses, including large swaths of untapped growth in 5G. This is part of why the company is expected to improve earnings by 9.5% this fiscal year and see a long-term annualized EPS growth rate of 11.5%. This should further improve its financial position and allow it to reward shareholders even more.
3. Hewlett Packard Enterprise Company (HPE - Free Report)
Hewlett Packard Enterprise is an integrated systems company focused on enterprise offerings like IT solutions, servers, and cloud-based products. The old Hewlett Packard Company might have been losing some of its clout, but the spinoff has created new efficiencies for HPE, and the potential here is great for income investors.
HPE is sitting at a comfortable Zacks Rank #3 (Hold) and has a dividend yield of 3.1%. The firm will report earnings next week, and analysts expect the quarter to reveal earnings growth of more than 48%. That estimate has also trended higher over the duration of the quarter, so sentiment is trending in the right direction. HPE has only missed once since the spinoff and also looks undervalued at just 9x earnings.
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