Dividend Stocks

Double Delight- 3 Tech Stocks Delivering Dividends and Growth

Driven by AI, these tech dividend stocks are an ideal choice for passive income investors

The tech industry is a hot space right now. Investors are watching the segment with keen interest, and it is understandable why there is so much attention on the space. Artificial Intelligence (AI) is grabbing headlines, and Nvidia (NASDAQ:NVDA) has set a record. Those who missed out on holding Nvidia are now on the lookout for tech dividend stocks that could show a similar rally. AI has become a part of several industries and is indispensable today.

The earnings season shows the importance of AI, and while Nvidia is wearing the crown right now, several other tech companies have been steadily growing. If you are a passive income investor and want the best of both dividends and growth, here are three tech stocks with strong upside potential and steady dividend payouts. Let’s take a look at these companies have a strong industry presence and a record of delivering dividends.

Taiwan Semiconductor Manufacturing (TSM)

Source: Sundry Photography / Shutterstock.com

Industry favorite Taiwan Semiconductor Manufacturing (NYSE:TSM) is an undervalued stock. Trading at $159, it is up 57% year-to-date (YTD) and 315% in the past five years. As the demand for chips continues to grow, TSM is set to benefit.

It is the world’s largest chip maker and produces chips for companies including Nvidia and Apple (NASDAQ:AAPL). It holds 60% of the market share in the foundry industry and 85% of the market share in the AI chip industry. 

A leader in the industry, TSM will benefit as Nvidia grows. Both companies have a close connection, and with the soaring demand for AI chips, TSM is set to expand. The company is struggling in the smartphone segment while thriving in the AI chip market. It will have to find a balance so that the drop in smartphone segment revenue does not impact the business as a whole. 

In its fourth-quarter results, TSM beat analyst estimates and reported revenue of $19.62 billion. It aims to begin mass production of 4-nanometer (nm) chips at its new Arizona plant in 2025. 

TSM enjoys a dividend yield of 1.52%, and the payout ratio stands at 33% of the earnings. This shows there is a potential to increase dividends in the coming years. 

While TSM stock hasn’t had a rally like Nvidia, there is a lot of upside potential from here. The demand is going to remain strong, and as a dominant chipmaker, Taiwan Semiconductor Manufacturing is set to benefit. 

Oracle (ORCL)

A photo of an Oracle (ORCL stock) sign outside a building.

Source: Jer123 / Shutterstock.com

I have been writing about Oracle (NYSE:ORCL) for a while now, and am impressed with the way the business is expanding. A global software company, Oracle has been in the industry for many years and is taking on AI demand with the right products. The company is building 100 new data centers and has signed noteworthy partnerships which will strengthen its market position. 

Besides partnering with Palantir Technologies (NYSE:PLTR) and Nvidia, Oracle has recently deepened its 30-year association with Accenture (NYSE:ACN) and will continue to offer generative AI solutions. Both companies aim to help businesses with data analysis. 

Trading at $124, ORCL stock is up 19% YTD and soared 6% in the past month. Investors who believe that the future is AI should start accumulating ORCL stock. The company impressed the market in third-quarter results that featured strong financials. The revenue hit $13.3 billion, up 7% while the cloud services segment was up 25% and reported revenue of $5.1 billion. An important metric, the remaining performance obligations hit $80 billion, up 29% year over year (YOY). 

Oracle is a fundamentally stable company with a strong history. It enjoys a dividend yield of 1.29% and has increased dividends for 14 consecutive years. Oracle is a stock to buy and hold for the next decade. Its AI investments will drive growth in the coming years. 

Cisco Systems (CSCO)

cisco (CSCO) logo on an office building

Source: Ken Wolter / Shutterstock.com

With a dividend yield of 3.46%, Cisco Systems (NASDAQ:CSCO) is an ideal choice for dividend investors. The company is a hidden gem that does not get the attention it deserves. 

Trading at $46, the stock is down 8% YTD and has been moving sideways over the past few months. The company is working on enhancing its AI offerings. While it is a little behind in the AI race, it is very much a part of the race. 

It reported revenue of $12.7 billion, down 13% YOY in the third quarter, and earnings per share (EPS) came in at 88 cents. Net income dropped 41% and management believes it was because of existing users setting up the equipment they received. The management enhanced its outlook with revenue guidance in the range of $53.6 billion to $53.8 billion. 

Cisco has increased dividends for 13 consecutive years, and with the product order trends looking up, I believe it has the potential to increase the dividends in the coming years. 

Investors aren’t happy with the results or the guidance but I believe the AI investments will pay off in the long term. The stock looks cheap to me and is a good choice for those looking to make money from dividends while the stock grows. Cisco stock isn’t going to show any immediate upside and it isn’t risk-free but if you are in it for the dividends, it is worth a bet. 

On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

Source link

Share with your friends!

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up now for breaking stock alerts

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.