Mega-cap tech stocks helped drive the impressive first half of 2019, and the broader industry is likely to fuel the markets for years to come. With that said, investors who want to be a part of the technology industry don’t just have to search for high-flying growth stocks. Instead, tech-minded investors can take a page out of the income investing book and focus on companies with solid dividends—that have grown nonetheless.
Finding a strong dividend-yielding tech stock might seem difficult, but investors should not feel too intimidated. For example, Apple (AAPL - Free Report) and some of the other biggest names in tech, pay dividends. And dividend-focused investors can search for the best tech stocks by using the Zacks Stock Screener, which is a great 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 you will find some of the best tech stocks for dividend investors to target.
With all that said, check out these three dividend-paying tech stocks to think about buying…
1. Science Applications International Corporation (SAIC - Free Report)
Science Applications International Corporation is a technology integrator that provides IT, engineering, and mission solutions and works across the defense, intelligence, civilian, and space sectors. The Reston, Virginia-Headquartered firm, which holds a market cap of $5.1 billion, has contracts with multiple branches of the U.S. military. In January, the firm officially announced the approval to buy rival government-services provider Engility to help bolster its business amid increasing consolidation in the larger defense contractor industry.
SAIC stock has jumped 36% in 2019 to outplace its industry’s 22% average climb. Looking ahead, our current Zacks Consensus Estimates call for the company to post Q2 revenue of $1.64 billion, which would mark a 47% climb from the year-ago period. This growth is expected to help lift adjusted Q2 earnings by 12.4%. Meanwhile, the firm’s full-year EPS figure is projected to pop 9% on 41% higher revenue. SAIC has also seen its earnings revisions trend more heavily upward recently to help it earn a Zacks Rank #2 (Buy). Science Applications International also boasts “B” grades for both Value and Momentum and an “A” for Growth in our Style Scores system. SAIC raised its most recent quarterly payout to $0.37 per share, up from $0.31 and has a dividend yield of 1.72% at the moment.
2. Cisco Systems, Inc. (CSCO - Free Report)
Cisco is coming off a stronger-than-projected Q3 of fiscal 2019 that helped it raise its fourth-quarter outlook. The historic networking power has expanded its IoT business in recent years in order to better compete going forward. On July 9, Cisco announced its plan to buy Acacia Communications (ACIA - Free Report) for $2.6 billion to help it meet heightened performance demands. The move is part of a series of acquisitions over the last serval years. Shares of the San Jose, California-headquartered firm have climbed 33% in 2019 to outpace its industry’s 28% climb and the S&P 500’s 18% move. CSCO stock currently hovers just off its 52-week high at around $57.81 per share.
Cisco paid a quarterly dividend of $0.35 a share the last two periods, up from $0.33 per quarter in calendar-year 2018. CSCO’s new quarterly payout also marked a 20% increase from its 2017 dividend. The networking giant is currently a Zacks Rank #2 (Buy) and sports a dividend yield of 2.42%. Cisco’s adjusted Q4 EPS figure is projected to jump over 17% on 4.2% higher revenue. The company’s current full-year earnings—due out on August 14–are projected to climb 18.5%, with sales set to pop 5.1%. This bottom-line strength is then projected to continue in 2020, with adjusted earnings expected to climb 11.4% higher than our 2019 estimate.
3. Microsoft (MSFT - Free Report)
Microsoft stock hit a new high of $140.65 per share during morning trading Friday after the tech powerhouse posted better-than-expected quarterly results after the closing bell Thursday. The firm’s Intelligent Cloud was once again the star of the show, as Q4 2019 unit revenue surged 19% to $11.4 billion, with Azure up 64%. The firm’s expansion into cloud computing has seen it compete directly with industry giant Amazon (AMZN - Free Report) . Meanwhile, its Office, Windows, and gaming businesses have continued to grow as well. MSFT stock is now up over 36% in 2019 and Microsoft is currently the world’s most valuable public company with a market cap over $1 trillion.
Microsoft pays an annualized dividend of $1.84 a share at the moment, with a 1.35% yield. Microsoft’s current dividend represented a 9.5% jump from the prior year’s quarterly payout. Peeking ahead, MSFT’s fiscal 2020 and 2021 revenue are both projected to climb by roughly 10%. Meanwhile, adjusted earnings are projected to jump over 7% in its current fiscal year and 13.5% higher in the following year. Microsoft is a Zacks Rank #2 (Buy) that also rocks “B” grades for Growth and Momentum in our Style Scores system. Despite its impressive climb, MSFT stock is trading at a discount compared to its industry’s 29.5X average at 26.6X forward 12-month earnings estimates.
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