3 Tech Stocks Paying Solid Dividends

When thinking of dividends, typical sectors that come to the minds of many include utilities, finance, or consumer staples.

However, it could surprise some that several technology companies also reward their investors handsomely.

Technology stocks are generally not targeted by income-focused investors, as it’s common for these companies to utilize cash to fuel growth.

Still, several large-cap tech stocks – Oracle ORCL, International Business Machines IBM, and Broadcom AVGO – have no issue paying their investors.

And they’ve grown their payouts quite significantly over the last five years.

Below is a chart illustrating the performance of all three stocks over the last year, with the S&P 500 blended in as a benchmark.

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Image Source: Zacks Investment Research

For those seeking tech exposure paired with dividends, let’s take a closer look at each one.

Broadcom

Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices focusing on complex digital and mixed signal complementary metal oxide semiconductor (CMOS) based devices and analog III-V-based products.

It’s nearly impossible to ignore the company’s dividend metrics; AVGO’s annual dividend currently yields a rock-solid 3.2%, nearly triple that of its Zacks Computer and Technology sector.

And the company has been committed to increasingly rewarding its shareholders, growing its payout by more than 20% over the last five years.

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Broadcom has a stellar earnings track record, exceeding earnings and revenue expectations in 11 consecutive quarters. Just in its latest release, AVGO penciled in a nearly 2% EPS surprise and reported revenue marginally above estimates.

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Oracle

Oracle is one of the largest enterprise-grade database, middleware, and application software providers, offering cloud solutions and services that can be used to build and manage various cloud deployment models.

The company’s annual dividend currently yields 1.5%, nicely above its Zacks sector average. Impressively, Oracle carries a solid 14% five-year annualized dividend growth rate.

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International Business Machines

International Business Machines has gradually evolved as a provider of cloud and data platforms, with its Red Hat acquisition strengthening its position in the hybrid cloud market. The company sports a Zacks Rank #2 (Buy).

IBM’s dividend metrics could be the most impressive of all; IBM’s annual dividend yield sits at 4.6%, nowhere near its Zacks sector average.

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Image Source: Zacks Investment Research

In addition, the company’s valuation multiples aren’t stretched, further bolstered by its Style Score of “B” for Value. IBM shares currently trade at a 14.9X forward earnings multiple, above the five-year median but below the Zacks sector average.

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Bottom Line

Investors love dividends, as they give a nice cushion, provide a reliable income stream, and offer more than one way to profit from an investment.

Still, when thinking of dividend-paying stocks, the technology sector certainly isn’t an area that receives attention.

However, all three stocks above – Oracle ORCL, International Business Machines IBM, and Broadcom AVGO – are exceptions, rewarding their shareholders handsomely.

For those seeking income paired with tech exposure, all three deserve consideration.

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