Searching for dividend-paying tech stocks can often feel like looking for a needle in a haystack.
Technology companies are notorious for plowing profits back into the business rather than sharing them with shareholders. This mindset echoes the legacy of Apple’s late co-founder Steve Jobs, who staunchly opposed paying dividends, citing limited value creation for shareholders. Such views have influenced a new generation of tech entrepreneurs to follow suit.
However, the tides may be turning. Companies like Meta Platforms and Alphabet have recently announced dividends, marking a significant departure from their historical practices. This move has mounted pressure on other major tech players such as Amazon and Tesla, though they show no immediate signs of following suit.
For income-oriented investors interested in the tech sector, the landscape is evolving. Here are three compelling dividend-paying tech stocks worthy of consideration:
Image source: Getty Images.
Microsoft: A Beacon of Stability
Microsoft (NASDAQ: MSFT) stands out as a stalwart dividend payer, boasting a modest yield of 0.7%. Since initiating dividend payments in 2003, Microsoft has consistently raised its dividends by at least 10% annually. The company’s robust competitive advantages position it well for sustained dividend growth lasting decades.
As the world’s most valuable company with a market cap exceeding $3 trillion, Microsoft commands a dominant market presence across diverse sectors like enterprise software, cloud computing, and operating systems. Notably, the company shares the distinction of holding a AAA credit rating from Standard & Poor’s alongside Johnson & Johnson. Moreover, Microsoft is a frontrunner in the realm of artificial intelligence, as evidenced by its strategic partnership with OpenAI.
Taiwan Semiconductor: A Semiconductor Gem
If dividend seekers gravitate towards the tech landscape, the semiconductor industry emerges as a prime hunting ground. Taiwan Semiconductor (NYSE: TSM) shines as a top contender within this space, commanding a lion’s share of the global contract-chip manufacturing market at 60%.
Renowned for producing 90% of advanced chip production in the foundry market, Taiwan Semiconductor boasts impressive operating margins around 40% and a staggering market capitalization of $800 billion. With a current dividend yield of 1.4%, the company pledges to maintain a sustainable dividend payout while fostering growth in tandem with the rise of generative AI technologies.
Oracle: Embracing Evolution
Oracle (NYSE: ORCL) represents a compelling dividend opportunity among legacy tech companies, challenging misconceptions about its relevancy. Over the past decade, Oracle has consistently outperformed the market, fueled by a transformative shift towards new growth engines.
While traditionally known for its database-management system and Java programming language, Oracle now thrives on escalating demand for data centers and cloud infrastructure services, propelled by the surge in generative AI technologies. Strategic alliances with tech powerhouses like Microsoft and Nvidia further bolster Oracle’s growth trajectory.
In its most recent quarter, cloud-infrastructure revenue surged by 49% to $1.8 billion, underscoring the company’s accelerating growth momentum. With a current dividend yield of 1.3% and a solid track record of dividend hikes since 2009, Oracle stands as a promising dividend play in the tech space for yield-seeking investors.
Amidst the burgeoning data-center expansion, the ascent of generative AI technologies, and flourishing partnerships, Oracle emerges as a compelling choice for tech investors eyeing sustainable dividend growth.
Should you invest $1,000 in Microsoft right now?
Before considering an investment in Microsoft, weigh this:
The analyst team at Motley Fool Stock Advisor has pinpointed what they deem the 10 best stocks for investors to acquire presently… and Microsoft didn’t make the cut. This exclusive selection of stocks holds the potential to deliver remarkable returns in the foreseeable future.
Reflect on the staggering success story of Nvidia when it entered this elite list back on April 15, 2005. A $1,000 investment at the time of recommendation would have multiplied to an astounding $671,728!*.
Stock Advisor offers a straightforward roadmap to success for investors, complete with portfolio-building guidance, regular analyst updates, and two new stock picks each month. Since 2002, the Stock Advisor service has quadrupled the return of the S&P 500*.
*Stock Advisor returns as of May 28, 2024