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Income Investing: 3 Technology Stocks Worth Consideration

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When thinking of dividends, common sectors of the market that are popular among investors include utilities, finance, or consumer staples.

However, a fair number of technology companies also reward their investors handsomely.

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

However, three large-cap companies – Apple AAPL, Microsoft MSFT, and Texas Instruments TXN – are all examples of technology stocks that provide shareholders with a passive income stream.

Below is a chart illustrating the performance of all three year-to-date, with the S&P 500 blended in as a benchmark.

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Zacks Investment Research

Image Source: Zacks Investment Research

For those interested in tapping into technology exposure paired with dividends, let’s take a closer look at each.

Apple

In its latest quarterly release, Apple delivered a positive 5.6% EPS surprise and reported revenue 2% above expectations. In a shareholder-friendly move, the company also announced a 4% increase to its quarterly cash dividend, payable on May 18th.

The dividend increases from Apple have definitely added up over time, and this is paired with the stellar price return that shares have provided.

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Zacks Investment Research

Image Source: Zacks Investment Research

Apple is a cash-generating machine, allowing it the flexibility to reward its shareholders consistently. In FY22, the technology titan generated a mighty $111.4 billion in free cash flow, improving nearly 20% year-over-year.

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Zacks Investment Research

Image Source: Zacks Investment Research

Microsoft

Microsoft posted quarterly results that impressed the market in its latest release, delivering a 10% EPS beat and reporting revenue nearly 4% above expectations. Below is a chart illustrating the company’s revenue on a quarterly basis.

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Zacks Investment Research

Image Source: Zacks Investment Research

The market has been impressed with MSFT’s quarterly releases in 2023 so far, as we can see by the green arrows circled in the chart below.

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Zacks Investment Research

Image Source: Zacks Investment Research

The company’s annual dividend presently yields 0.9%, above the Zacks Computer and Technology sector average by a few ticks. Notably, Microsoft has grown its payout by more than 10% over the last five years, fully reflecting its shareholder-friendly nature.

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Zacks Investment Research

Image Source: Zacks Investment Research

Texas Instruments

Texas Instruments is an original equipment manufacturer of analog, mixed-signal, and digital signal processing (DSP) integrated circuits.

TXN’s dividend metrics could be the most attractive of all three; TXN’s annual dividend presently yields 3%, more than triple the Zacks sector average. In addition, the company boasts a 15% five-year annualized dividend growth rate.

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Zacks Investment Research

Image Source: Zacks Investment Research

Texas Instrument shares are somewhat cheap on a relative basis, with the current 21.9X forward earnings multiple sitting nicely below the 23.2X five-year median and highs of 24.1X last year.

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Zacks Investment Research

Image Source: Zacks Investment Research

Bottom Line

Investors shouldn’t forget technology stocks when considering an income-generating portfolio. On top of a passive income stream, market participants receive exposure to the high-flying sector.

And all three companies above – Apple AAPL, Microsoft MSFT, and Texas Instruments TXN – are all examples of dividend-paying technology stocks.

All three have grown their dividend payouts nicely over the years, reflecting a commitment to increasingly rewarding shareholders.

 

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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