When many people think about investing in tech stocks, they picture high-growth opportunities. Considering the gains from some tech companies over the past decade or so, they’re not wrong in their thoughts, either. Growth stocks and tech stocks have gone hand-in-hand for quite some time now.
However, tech stocks present more than just high growth opportunities. Many also pay a dividend that helps contribute to their total returns. If you’re looking for dividend-paying tech stocks to add to your portfolio, look no further than the following three.
1. Nvidia
Nvidia (NVDA 0.96%) is a global leader in producing graphics processing units (GPUs) and is also newly part of the coveted trillion-dollar market cap club.
Nvidia began paying a dividend in 2013 and increased it every year until November 2018. Its dividend was $0.16 per share quarterly until a 4-for-1 stock split brought it down to $0.04, where it currently stands. That’s far from an eye-popping dividend, but it’s something.
Nvidia’s dividend yield is currently low by all standards, and its gotten worse after the stock price surged this year. Nvidia’s stock is up more than 200% in 2023. Nvidia’s dividend is truly an added bonus to a stock that’s grown at a remarkable pace.
As big data becomes more prevalent, Nvidia’s GPUs and AI solutions are becoming more in demand. It’s been a domino effect: Companies are accumulating massive amounts of data, making data centers more important and increasingly necessary. This bodes well for Nvidia’s financials because many data centers rely on its hardware for their operations.
NVDA Revenue (Quarterly) data by YCharts
A lot of AI-fueled hype has led to Nvidia’s massive year, but the company is positioned to be a significant player in the tech space for quite some time.
2. Microsoft
Microsoft (MSFT 0.05%) managed to become the Swiss army knife of tech companies — it does it all. Through decades of strategic growth and partnerships, Microsoft has become intertwined in the global business world in a way that no other tech company has.
Microsoft’s financials have been impressive, with revenue and net income increasing over 206% and 129%, respectively, in the past decade. In its fiscal year 2023, Microsoft made $211.9 billion in revenue, up 7% year over year. But perhaps more notable is how many different streams of revenue it has.
In Q4 2023, Microsoft’s intelligent Cloud segment, which includes its cloud product Azure, grew its revenue by 15% year over year. Its search and news advertising revenue grew 8% year over year. I singled those two out specifically because they stand to gain a significant boost from Microsoft’s partnership with ChatGPT creator OpenAI.
Azure and Bing are second in market share in their respective lanes, but Microsoft is picking up ground as it uses its exclusive rights with OpenAI to craft out its competitive advantage in those areas.
Microsoft’s current quarterly dividend is $0.75, which is 167% more than 10 years ago, and a compound annual growth rate of over 10% during that span.
3. Cisco Systems
Cisco Systems (CSCO -0.47%) plays a pivotal role in the world’s web and communications infrastructure. The company supplies networking hardware, telecom equipment, cybersecurity solutions, and plenty of products to corporations and governments around the world.
Its hardware made the company the $200 billion giant it is today, but Cisco has been intentional with its transition to offering software and subscription-based services that bring in recurring revenue.
One potential growth area for the business is cybersecurity. Instead of relying solely on in-house growth, Cisco has shown a willingness to put its money to use with a recent announcement of its intentions to acquire cybersecurity company Splunk for roughly $28 billion.
With over $26 billion in cash and cash equivalents on its balance sheet at the end of its fiscal year 2023, Cisco is equipped to continue a growth-by-acquisition strategy that can allow it to capture future market opportunities.
Cisco offers the most lucrative dividend on the list, with a quarterly payout of $0.39 per share and a trailing-12-month yield of around 2.9%. The dividend should continue getting more attractive, considering Cisco has increased it yearly since it first declared one in March 2011.
Stefon Walters has positions in Microsoft. The Motley Fool has positions in and recommends Cisco Systems, Microsoft, Nvidia, and Splunk. The Motley Fool has a disclosure policy.
