The 10 Biggest Dividend Paying Tech Stocks Ranked

Up to date on August twenty fifth, 2021 by Bob Ciura

Know-how shares (or “tech shares” for brief) are likely to see extra volatility through the enterprise cycle than different sectors, like client staples, as an illustration. With that mentioned, the tech sector has large upside.

Volatility could be put to good use by buyers which might be thinking about proudly owning huge tech securities by shopping for at trough valuations and avoiding these buying and selling in extra of honest worth.

As well as, the most important shares of the group typically pay very respectable dividends, which assist to easy out complete returns tough durations. Payout ratios are typically decrease for tech shares as effectively so the dividends supply a variety of security throughout downturns, rising their enchantment.

You’ll be able to obtain the entire record of all 330+ dividend paying tech shares obtainable on the large US market exchanges by clicking on the hyperlink beneath:

The rankings on this article are derived from our anticipated complete return estimates from Positive Evaluation Analysis Database. The ten largest dividend paying tech sector shares by market cap are ranked on this article, with #10 having the bottom anticipated complete returns and #1 having the best.

Rankings are compiled primarily based upon the mix of present dividend yield, anticipated change in valuation in addition to forecast earnings-per-share development to find out which shares supply the very best complete return potential for shareholders.

Desk of Contents

The highest 10 shares on this record are all dividend-paying tech shares with yields above the S&P 500 Index common (at present 1.3%). Moreover, all 10 shares have Dividend Threat Scores of C or higher within the Positive Evaluation Analysis Database.

You’ll be able to immediately leap to any particular person part of the article by clicking on the hyperlinks beneath:

Finest Huge Tech Dividend Inventory #10: Pc Companies, Inc. (CSVI)

Pc Companies offers regional banks with a variety of companies, resembling core processing, digital banking,
funds processing, and regulatory compliance options. It has a market cap of $1.7 billion.

In early July, Pc Companies reported (7/7/2021) monetary outcomes for the first quarter of fiscal 2022. The firm grew its income by 8% and its earnings–per–share by 2% over the prior yr, to new all–time excessive ranges. The tepid earnings development resulted from a lot larger termination charges acquired in final yr’s quarter however Pc Companies maintained its sturdy enterprise momentum.

Digital banking options loved excessive development due to the efforts of banks to help their clients on-line whereas revenues from regulatory compliance and funds processing remained sturdy. Additionally it is essential to notice that 90% of the entire revenues are generated from lengthy–time period contracts. Administration expects momentum to speed up within the second half of this yr due to new clients coming on-line.

Pc Companies just lately elevated its dividend by 8%, marking its fiftieth consecutive yr of dividend will increase. Prior to now 10 years the corporate has grown its dividend by 15.9% per yr. It has additionally elevated its income and web earnings for 21 and 24 consecutive years, respectively.

Pc Companies’ spectacular development is a testomony to the power of its enterprise mannequin and the existence of a big aggressive benefit. The corporate indicators multi–yr contracts with its clients and gives them a variety of companies. It’s thus very expensive and inefficient for these clients to cease working with the firm, significantly provided that they pay considerable early termination charges. In consequence, Pc Companies enjoys excessive renewal charges.

We anticipate 8% annual earnings-per-share development over the following 5 years. The inventory additionally has a 1.8% dividend yield. Nevertheless, we view the inventory as overvalued. Shares commerce for a 2021 P/E ratio of 27.9, whereas now we have a goal P/E ratio of 17.4 which is the same as the 10-year common. Subsequently, anticipated returns are simply 0.4% per yr as a result of overvaluation of the inventory.

Finest Huge Tech Dividend Inventory #9: Cisco Techniques (CSCO)

Cisco Techniques is the worldwide chief in excessive efficiency laptop networking techniques. The corporate’s routers and
switches permit networks world wide to attach to one another by the web. Cisco additionally gives information middle, cloud, and safety merchandise. Cisco generates about $53 billion in annual revenues.

Cisco reported earnings outcomes for the fourth quarter and fiscal yr 2021 on 8/18/2021. Quarterly revenue grew 8.1% to $13.1 billion, beating estimates by $90 million. Adjusted earnings–per–share of $0.84 elevated 5% in contrast with the identical quarter final yr. For the yr, income grew 1% to $49.8 billion whereas adjusted earnings–per–share was basically flat.

Within the fiscal fourth quarter, Infrastructure Platforms and Safety revenues had been up 13% and 1%, respectively, whereas Functions fell 1%. Software subscriptions elevated 9% yr–over–yr to $4 billion.

Supply: Investor Presentation

By area, the Americas improved 8%, EMEA was larger by 6% and Asia–Pacific/Japan/China was up 13%.

We anticipate 6% annual EPS development over the following 5 years. Share repurchases will assist increase EPS development. Cisco has $7.9 billion, or ~3% of its present market cap, remaining on its share repurchase authorization. Cisco expects first quarter of fiscal yr 2022 adjusted earnings–per–share of $0.79 to $0.81.

For the fiscal yr, revenue is anticipated to develop 7.5% to 9.5% and adjusted earnings–per–share is projected in a spread of $3.38 to $3.45.

On the midpoint of steering, Cisco shares commerce for a 2021 P/E of 17.4. Our honest worth estimate is a P/E of 15, which implies the inventory is barely overvalued. Cisco inventory has a present dividend yield of two.5%. Total, 5-year annual returns are anticipated to achieve 5.4% by 2026.

Finest Huge Tech Dividend Inventory #8: Worldwide Enterprise Machines (IBM)

IBM is a worldwide informationrmation know-how firm that offers built-in enterprise options for software program, {hardware}, and companies. IBM’s focus is operating mission vital techniques for massive, multi–nationwide clients and governments. IBM sometimes offers finish–to–finish options.

IBM is a dividend development firm. It has elevated its dividend for 26 consecutive years, putting it on the unique Dividend Aristocrats record.

In the companies enterprise, IBM is the world’s largest IT supplier with ~5.5% market share. In software program, IBM’s software program enterprise is usually middleware, which is the software program layer that connects applications and gadgets to one another. In {hardware}, IBM sells the z15 mainframes, storage, and the Energy–primarily based servers.

The firm has 5 enterprise segments: Cloud & Cognitive Software program, World Enterprise Companies, World Technology Companies, Techniques, and Global Financing. IBM generated annual income of ~$73.6B in 2020.

IBM reported higher than anticipated outcomes for Q2 2021 on July 19th, 2021.

Supply: Investor Presentation

Company-wide income elevated 3% to $18,745M from $18,123M whereas diluted adjusted earnings per share rose 7% to $2.33 from $2.18 on a yr–over–yr foundation. Diluted GAAP earnings per share fell (–3%) to $1.47 within the quarter from $1.52 within the prior yr.

Income for Cloud & Cognitive Software program elevated 6.1% to $6,098M from $5,748M in comparable quarters because of 12% development in Cloud & Knowledge, 12% development in Cognitive however offset by a (–7%) decline in Transaction Processing. World Enterprise Income elevated 11.6% to $4,341M from $3,890M because of 16% development in Consulting, 28% development in Global Process Services, and 5% development in Utility Administration. IBM ended Q2 2021 with a backlog of $103.7B.

We anticipate 4% annual EPS development for IBM, along with the 4.7% dividend yield. Primarily based on anticipated EPS of $11.03 for 2021, shares commerce for a P/E ratio of 12.7; our honest worth estimate is 11. The mix of EPS development, dividends, and a declining P/E a number of end in complete anticipated returns of 5.7% per yr.

Finest Huge Tech Dividend Inventory #7: Qualcomm Included (QCOM)

Qualcomm develops and sells built-in circuits to be used in voice and information communications. The chip maker receives royalty funds for its patents utilized in gadgets that are on 3G and 4G networks. Qualcomm ought to generate gross sales of greater than $33 billion this yr.

Qualcomm released earnings outcomes for the third quarter of fiscal 2021 on 7/28/2021 (the corporate’s fiscal yr ends September 30th). Revenue grew 64.5% to $8.1 billion, beating estimates by $500 million. Adjusted earnings–per–share of $1.92 in contrast favorably to adjusted earnings–per–share of $0.86 within the prior yr and was $0.24 higher than anticipated.

Revenues for Qualcomm CDMA Applied sciences, or QCT, surged 70% to $6.5 billion due to continued power throughout handsets, 5G, automotive and Web of Issues companies.

Qualcomm’s Web of Issues enterprise can be a future development catalyst.

Supply: Investor Presentation

Individually, Qualcomm Know-how Licensing, or QTL, grew 43% to $1.5 billion final quarter. The corporate reaffirmed its expectations that handset shipments will develop at a excessive single–digit price to a spread of 450 million to 550 million for calendar yr 2021.

The firm has grown earnings–per–share at a price of 6.6% per yr during the last decade. An settlement with Apple and Huawei, a decrease share depend and management in 5G ought to permit the corporate to develop within the coming years. We additionally consider that demand for 3G/4G/5G headsets will enhance following a restoration from the COVID–19 pandemic. We anticipate 7% annual EPS development.

Shares seem overvalued, with a 2021 P/E of 17.4 in contrast with our honest worth estimate of 15.7. Qualcomm shares at present yield 1.9%. Total, complete returns are anticipated to achieve 6.6% per yr.

Finest Huge Tech Dividend Inventory #6: Texas Devices (TXN)

Texas Devices is a semiconductor firm that operates two enterprise models: Analog and Embedded Processing. Its merchandise embrace semiconductors that measure sound, temperature and different bodily information and convert them to digital indicators, in addition to semiconductors which might be designed to deal with particular duties and purposes.

Texas Devices reported its second quarter earnings outcomes on July 21. Throughout the quarter Texas Devices generated revenues of $4.6 billion, which represents a rise of 41% versus the earlier yr’s quarter. This was the results of a income enhance of 42% within the Analog enterprise, whereas revenues within the Processing section grew by an equally engaging 43% yr–over–yr.

Texas Instruments generated earnings–per–share of $1.99 through the second quarter, which was higher than the analyst consensus estimate, coming in $0.14 forward of the analyst group’s forecast.

Texas Devices has successfully allotted capital, with over $80 billion up to now 10 years unfold throughout inner investments and acquisitions designed to generate future development, whereas rewarding shareholders with buybacks and dividends.

Supply: Investor Presentation

Texas Devices’ coverage of returning all free money flows to the corporate’s shareholders within the type of dividends and share repurchases impacts its earnings–per–share development, as a declining share depend will increase every remaining share’s portion of all income. Texas Devices has purchased again almost 50% of all shares since 2004.

By means of a mix of natural development, acquisitions, and share buybacks, we anticipate 8% annual EPS development for Texas Devices by 2026.

Shares commerce for a 2021 P/E of 23.5, in contrast with our honest worth estimate of 20. This implies the inventory is barely overvalued, and a declining P/E might cut back returns over the following 5 years. Shares even have a 2.2% dividend yield. Total, complete returns are anticipated to achieve 6.9% per yr for Texas Devices.

Finest Huge Tech Dividend Inventory #5: Intel Company (INTC)

Intel is the most important producer of microprocessors for private computer systems, transport about 85% of the world’s microprocessors. Intel additionally manufactures merchandise like servers and storage gadgets which might be utilized in cloud computing. Intel generates about $73 billion in annual gross sales.

Intel reported second quarter earnings outcomes on 7/22/2021. Income grew 2% to $18.5 billion, which was $700 million above expectations. Adjusted earnings–per–share of $1.28 was a $0.05, or 4.1%, enchancment from the prior yr and beat estimates by $0.21.

The PC–Centric enterprise stays very sturdy as income grew 6% to $10.1 billion. PC volumes grew 33% yr–over–yr, which had been partially offset by declines in common promoting costs.

The opposite companies stay combined. Knowledge Heart Group fell 9% to $6.5 billion, primarily because of weaker ends in the cloud enterprise. Web of Issues Group grew 47% to $984 million as this section benefited from a restoration from COVID–19.

Intel once more supplied revised steering for 2021. The corporate expects earnings–per–share of $4.80 for the yr, up from $4.60 beforehand.

Intel’s key aggressive benefit is that it’s the largest and most dominant firm in its sector. This offers the
firm dimension and scale that opponents can’t match.

We see complete returns at 8.8% yearly for Intel going ahead. This may consist of the present 2.6% dividend yield, 5% anticipated EPS development and a small increase from a rising valuation a number of.

Finest Huge Tech Dividend Inventory #4: SAP SE (SAP)

SAP SE develops, sells, and maintains a wide range of enterprise software program merchandise which might be utilized by firms, governments, and academic companies. The corporate has greater than 400,000 clients in 180 nations. SAP is headquartered in Germany and reviews monetary ends in Euros. American buyers can provoke an possession stake in SAP by American Depository Receipts.

SAP reported its second quarter earnings outcomes on July 21. The corporate recorded revenues of €6.7 billion through the quarter, which is the same as $7.9 billion. SAP’s revenues through the quarter had been down 1% yr over yr, which missed the analyst consensus estimate barely.

Supply: Investor Presentation

SAP’s cloud income development accelerated through the quarter, which is why SAP is now forecasting cloud income development of 15% to 18% for the yr. Cloud income development was not excessive sufficient to offset declining software program revenues, nevertheless. SAP’s working revenue began to climb once more through the quarter.

SAP’s earnings–per–share totaled €1.75, or $2.07 on an adjusted foundation through the second quarter. This represents a 50% enhance yr–over–yr on an adjusted foundation, and income had been method larger than what analysts had forecasted.

SAP’s strongest aggressive benefit is its recurring income enterprise mannequin. Throughout fiscal 2020, greater than two–thirds of the corporate’s revenue was recurring in nature, or what administration calls predictable income. This ratio of predictable income has risen persistently within the final couple of years.

Recurring income permits the corporate to optimize buyer retention charges and to use the ensuing money flows to aggressively spend money on development alternatives, resembling its cloud enterprise.

We anticipate complete returns of 10.1% for SAP per yr, consisting of 8% annual EPS development, the 1.5% dividend yield and a small increase from an increasing P/E a number of.

Finest Huge Tech Dividend Inventory #3: HP Inc. (HPQ)

Hewlett–Packard’s story goes again to 1935 with two males in a one–automotive storage making a big impact on digital check gear, computing, information storage, networking, software program and companies that has lasted for greater than eight many years.

On November 1st, 2015, Hewlett–Packard spun off Hewlett Packard Enterprise Firm (HPE) – which was its enterprise know-how infrastructure, software program and companies enterprise – and altered its title to HP Inc. (HPQ).

At present HP Inc. has centered its enterprise actions round two important segments: its product portfolio of printers, and its vary of so–referred to as private techniques, which incorporates computers and cellular gadgets.

HP reported its second quarter (fiscal 2021) outcomes on Could 27. The firm reported income of $15.9 billion for the quarter, which was up 27% from the earlier yr’s quarter.

Supply: Investor Presentation

Non–GAAP earnings–per–share totaled $0.93 per share through the quarter, which beat the analyst consensus estimate simply. Earnings–per–share had been up by an enormous 82% versus the prior yr’s quarter.

The corporate at present forecasts earnings–per–share in a spread of $0.81 to $0.85 for the third quarter, which might end in one other sizeable yr–over–yr development versus the identical quarter throughout fiscal 2020. HP’s client enterprise has remained sturdy in current quarters, and company clients are rising their spending once more.

HP get pleasure froms aggressive benefits as a frontrunner in its two legacy companies. The lengthy–time period viability of those markets is unknown to some extent, however for now HP owns a $3+ billion annual underlying revenue machine. HP might be a serious beneficiary of consolidation in the business, and due to its sturdy stability sheet and ample money flows, it might simply develop into an acquirer of competing companies.

It’s forecasted that earnings–per–share will hit a new report stage this yr, with administration’s earnings–per–share steering vary being $3.40 to $3.50.

Primarily based on the midpoint, shares at present commerce for a 2021 P/E of 8.5. That is beneath our honest worth P/E of 10. Along with an increasing valuation a number of, shares at present yield 2.7% whereas we anticipate 4% annual EPS development. Complete returns are anticipated to achieve 10.3% per yr.

Finest Huge Tech Dividend Inventory #2: Hewlett Packard Enterprises (HPE)

The Hewlett Packard Enterprise Firm (generally known as HPE) is a multinational enterprise data know-how firm primarily based in San Jose, California. The corporate is a enterprise–targeted group with two divisions: Enterprise Group, which works in servers, storage, networking, consulting and help, and Monetary Companies.

The newly created Enterprise agency focuses on new applied sciences within the digital infrastructure.

Supply: Investor Presentation

On June 1st, 2021, HPE reported its Q2–2021 results for the interval ended April thirtieth, 2021. For the quarter, revenues rose by 11% to $6.83 billion, exhibiting higher than regular sequential seasonality pushed by sturdy demand. HPE’s annualized income run–price (ARR) reached $678 million, up 30% from the prior–yr interval.

The corporate’s “Compute” revenues of $3 billion had been 12% larger year-over-year, whereas the “Storage” section loved 5% income development to $1.1 billion. Consequently, non–GAAP EPS grew to $0.46, 70% excessiveer YoY, because of compressed ends in the comparable interval final yr on account of the pandemic outbreak.

Management hiked its FY2021 outlook as soon as once more, pointing in the direction of FY2021 non–GAAP diluted EPS in a spread of $1.82 to $1.94 (beforehand $1.70–$1.88) and free money movement of $1.2 to $1.5 billion (beforehand $1.1 to $1.4 billion).

The corporate’s web earnings had been underneath strain over the previous few years, however EPS remained comparatively secure amid large buybacks. Administration has seen share buybacks as a extra environment friendly method to return capital to shareholders.

Since 2015, HPE has repurchased round 29% of its inventory. As the corporate grows in Intelligence Cloud’s ARRs, profitability and EPS development ought to regularly rely less on its legacy segments and buybacks to develop.

With the most recent quarter reaffirming the Cloud section’s sturdy development prospects whereas displaying promising ends in its legacy section, we’re elevating our EPS development estimates to six%. EPS development ought to be powered by price–reducing efficiencies, inventory buybacks, and gross margins increasing.

HPE has a 2021 P/E of 8, barely beneath our honest worth estimate of 8.5. Future returns can be pushed largely by the three% dividend yield and 6% anticipated EPS development, for complete returns of 10.4% per yr over the following 5 years.

Finest Huge Tech Dividend Inventory #1: Micro Focus Worldwide plc (MFGP)

Micro Focus Worldwide PLC is an enterprise software program company that primarily companies company customers inside the Forbes World 2000. The corporate’s merchandise embrace IT infrastructure and enterprise purposes.

Micro Focus Worldwide’s working segments embrace Safety, IT Operations Administration, Utility Supply Administration, Data Administration & Governance, and Utility Modernization & Connectivity.

Micro Focus Worldwide is headquartered within the U.Okay., however U.S. buyers can provoke an possession stake by American Depository Receipts.

Micro Focus reported its interim outcomes for the fiscal yr 2021 (a interval that ended April 30) on July 1. Adjusted earnings–per–share decreased 8.3% to $0.66. Income fell 4.6% to $1.4 billion, which continues a sample of a deaccelerated decline from the second half of final fiscal yr.

Supply: Investor Presentation

The corporate nonetheless confronted headwinds associated to the COVID–19 pandemic, however did see some agreements closing faster than anticipated within the quarter. Licensing revenues had been up virtually 10% for the primary half, although this was offset by mid–single–digit to excessive single–digit declines in different areas.

Adjusted EBITDA declined 7.7% to $519 million whereas adjusted EBITDA margin was down 130 foundation factors to 37.7%. Each declines had been lower than what the corporate noticed in fiscal yr 2020. Adjusted free money movement totaled $247 million.

Going ahead, we consider that Micro Focus is extra more likely to generate a low–single–digit earnings–per–share development price, by marginal income development and a few margin upside.

Micro Focus Worldwide’s most compelling aggressive benefit is the deep and technical relationships it has with its enterprise clients. Micro Focus’ administration notes that 70% of the corporate’s income is recurring, which offers it with substantial enterprise stability and recurring money flows.

Shares commerce for a P/E of 4.5, beneath our honest worth estimate of seven. Growth of the P/E ratio might increase annual returns by 9.2% per yr. As well as, we anticipate 4% annual EPS development, whereas the inventory has a ~3% dividend yield.

Total, complete returns are anticipated to exceed 16% per yr. This makes MFGP probably the most engaging dividend-paying tech inventory with a market-beating yield and a passable Dividend Threat rating.

Ultimate Ideas

Tech shares haven’t historically been related to dividends, however there are many high quality dividend payers in tech sector to select from.

The ten tech shares on this article all pay dividend yields above the present S&P 500 Index common. In addition they have sturdy Dividend Threat scores, and constructive complete anticipated returns for the following 5 years.