10 Best Technology Dividend Stocks to Buy
In this article, we discuss the 10 best technology dividend stocks to buy. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Technology Dividend Stocks To Buy.
Dividend investing has come to limelight again in 2022 as the broader market suffered a massive downturn which is expected to last well into 2023. Investors are looking for high-dividend stocks that are also reliable and have safe and secure dividend payments. The Federal Reserve is continuing to increase interest rates to control inflation. These rate hikes could result in job losses in the near future. Equities are also taking a beating and they are not expected to recover anytime soon. This has created a lot of uncertainty in the market, especially among average investors with budget constraints. They want to avoid investing in tech growth stocks but at the same time don’t want to just keep the cash in their accounts. Dividend investing is one of the best ways to park your cash given you choose dividend stocks carefully.
According to a CNBC article, Sam Stovall, the chief investment strategist at CFRA research, believes that dividend stocks reduce the overall volatility and provide a “cushion to offset price declines.” The CNBC report cites data to back this claim. As of September, the S&P 500 was down about 23% year to date. On the other hand, the FTSE High Dividend Yield Index was down just about 5% in the same period. This shows that dividend stocks can easily offset the market volatility.
Stovall also highlighted the importance of dividend reinvestment plans. The analyst said that reinvested dividends account for a whopping 33% of the total returns of the S&P 500 since 1945 through September. This data point shows that dividend stocks do not only perform when the market conditions are tough. Wise investors have been enjoying the compounding effect of their dividend income in all market cycles. The analyst, according to CNBC, said that dividend investing can improve “your performance by a third without doing anything.”
This compounding effect becomes more notable if we change the time period to calculate the returns of reinvested dividends. The CNBC article said that the S&P 500 has gained 1,455% since 1988. This would mean that if you invested $10,000 in 1988, your invested amount would now be about $155,500. But if you take into account reinvested dividends, your $10,000 would be $329,000. This is the power of compounding. Investors can offset risks and also earn stable income by investing in solid dividend stocks.
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For this article we picked tech dividend stock with decent yields and solid dividend history. These companies not only offer stable income but can also see a boost in their share prices once the market starts to rebound. These companies have long-term growth catalysts and they are also popular among the 895 hedge funds tracked by Insider Monkey as of the end of the second quarter of this year.
Best Technology Dividend Stocks To Buy
10. Apple Inc. (NASDAQ:AAPL)
Apple Inc. (NASDAQ:AAPL) is quickly gaining popularity as a strong dividend-paying company in the technology sector. Apple is one of those rare stocks that offer both long-term share appreciation opportunities as well as a stable dividend income. Apple Inc. (NASDAQ:AAPL) has increased its dividend consistently for the last 9 years. Apple stock recently jumped close to 9% after the company posted upbeat quarterly results, defying skeptics who were forecasting weak iPhone sales data. Dan Ives of investment firm Wedbush said in a note that Apple Inc. (NASDAQ:AAPL) proved to be "the one bright spot" in an otherwise "horror show week" of tech earnings.
Apple Inc. (NASDAQ:AAPL) is the ninth most popular stock in the database of 895 hedge funds tracked by Insider Monkey as of the end of the second quarter. Among the major hedge funds which have been enjoying stable dividend income from the company include Warren Buffett’s Berkshire and Ken Fisher’s Fisher Asset Management.
Here is what Wedgewood Partners specifically said about Apple Inc. (NASDAQ:AAPL) in its Q3 2022 investor letter:
“Apple Inc. (NASDAQ:AAPL) grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”
9. Analog Devices, Inc. (NASDAQ:ADI)
Massachusetts-based Analog Devices, Inc. (NASDAQ:ADI) is a semiconductor company that specializes in signal conversion, data processing and power management technologies. Analog Devices, Inc. (NASDAQ:ADI) has a dividend yield of 2.1% as of October 29. In February, the company upped its dividend by a whopping 10%. This marked the19th increase in dividend from the company in the past 18 years.
In October, Citi analyst Christopher Danely said in a note to investors that Analog Devices, Inc. (NASDAQ:ADI) is expected to be one of the outperformers during the current downturn that he thinks is the worst "in at least a decade." The analyst thinks the downturn is affecting “every company and end market” including Analog Devices, Inc. (NASDAQ:ADI) but said the company’s management is honest about the effects of the downturn and is taking steps to prepare the company for the possible problems. He has a $195 price target on Analog Devices, Inc. (NASDAQ:ADI).
Here is what Madison Funds has to say about Analog Devices, Inc. in its Q3 2021 investor letter:
“At its 2017 investor day, Analog Device’s VP of Automotive, Mark Gill, described how the company’s content on well-equipped electric vehicles was $600 per car compared to $250 per car for the traditional 2017 internal combustion engine car. Since then, Analog has highlighted the success of its EV battery management systems (BMS) product nearly every quarter. The BMS product is hardware and software that manages the power into and out of the battery systems. It’s the brains of the operation. Analog says it’s on its fifth generation BMS product, that it has the no. 1 market share in high voltage products, and that it is on 5 of the top 10 selling EVs. While we think that the BMS product is just 1 to 1.5% of Analog’s product mix, we think that it could add nearly a point of revenue growth per year to the company’s top-line given the expected ramp in EV production. This is a material amount of growth atop an already nicely growing company revenue line.”
8. Broadcom Inc. (NASDAQ:AVGO)
Broadcom Inc. (NASDAQ:AVGO) is one of the best technology dividend stocks. The semiconductor and infrastructure software company has been increasing its dividend consistently for over a decade now.
In October, Bank of America analyst Vivek Arya reiterated a Buy rating on Broadcom Inc. (NASDAQ:AVGO) stock along with several other peers, adding that the group will benefit from an increase in cloud spending despite the current industry headwinds. The analyst specifically mentioned the Tomahawk 5 switch of Broadcom Inc. (NASDAQ:AVGO) for the expected strength. Broadcom Inc. (NASDAQ:AVGO) has a relatively high dividend yield in the tech sector, coming in at 3.4% as of October 29.
As of the end of the second quarter, 66 hedge funds tracked by Insider Monkey had stakes in Broadcom Inc. (NASDAQ:AVGO), compared to 71 funds in the previous quarter. Ken Fisher’s hedge fund was the biggest stakeholder in the company at the end of June with a $716 million stake.
Here is what Carillon Tower Advisers specifically said about Broadcom Inc. (NASDAQ:AVGO) in its Q2 2022 investor letter:
“Tech stocks, including Broadcom Inc. (NASDAQ:AVGO), were one of the hardest-hit sectors due to fears over a weakening macroeconomic environment. Broadcom, however, outperformed semiconductor peers as its end-market exposures provided relatively more defensive characteristics.”
7. Comtech Telecommunications Corp. (NASDAQ:CMTL)
Comtech (NASDAQ:CMTL) is a relatively unknown tech stock which is trading at around $11 as of October 29. However, the stock’s dividend yield stands at 3.68%. In September, Comtech (NASDAQ:CMTL) announced a quarterly cash dividend of $0.10 per share. This was the forty-ninth consecutive quarterly dividend by the company. This makes Comtech (NASDAQ:CMTL) one of the best dividend stocks in budget for investors who are looking to park their cash for stable income in the coming months of financial volatility.
Comtech (NASDAQ:CMTL) recently won $50 million of incremental funding for its first quarter of 2023 for an existing contract to provide next generation troposcatter systems in support of the U.S. military.
Hedge funds are increasing their bets on the company. 14 out of 895 hedge funds tracked by Insider Monkey reported having stakes in Comtech (NASDAQ:CMTL) as of the end of June, compared to 9 funds in the previous quarter.
6. Cisco Systems, Inc. (NASDAQ:CSCO)
Cisco Systems, Inc. (NASDAQ:CSCO) is one of the most recognizable players in the technology industry. With a dividend yield of over 3%, Cisco Systems, Inc. (NASDAQ:CSCO) has been a reliable income stock which also has long-term growth catalysts. In August this year, the company declared a $0.38/share quarterly dividend, in line with previous.
In August, KGI Securities analyst Jackson Chiang upgraded Cisco Systems, Inc. (NASDAQ:CSCO) to Outperform from Neutral with a $53 price target. However, the stock has been under pressure this year amid a broader selloff in the tech industry. On a year-to-date basis the stock has lost 27%. As of the end of the second quarter, 63 hedge funds tracked by Insider Monkey had stakes in Cisco Systems, Inc. (NASDAQ:CSCO).
Here is what Carillon Eagle Growth & Income Fund has to say about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q1 2022 investor letter:
“Cisco Systems (NASDAQ:CSCO) traded lower as investors weighed how supply chain concerns would impact sales growth. The company has been upgrading its switching and routing offerings, which should lead to strong demand as on-site locations upgrade infrastructure.”
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Disclosure: None. 10 Best Technology Dividend Stocks To Buy is originally published on Insider Monkey.