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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
