Dividend-paying tech stocks aren’t always easy to find.
Tech stocks have a reputation for reinvesting in growth rather than sharing profits with investors. Apple co-founder and longtime CEO Steve Jobs famously refused to pay a dividend, believing they didn’t create value for shareholders, and future tech entrepreneurs seem to have taken his lead.
However, there are some signs that that could be changing. Both Meta Platforms and Alphabet declared a dividend for the first time this year, something they could have done ages ago, and that’s increased pressure on other big tech stocks like Amazon and Tesla, though there are no signs that they will pay one any time soon.
If you’re an income investor and you like tech stocks, there are some good options out there. Keep reading to see three dividend-paying tech stocks to buy today.
1. Microsoft
Microsoft (NASDAQ: MSFT) won’t win any awards for dividend yield, paying a yield of just 0.7%, but the tech giant is about as reliable a dividend payer as you’ll find.
Microsoft started paying a dividend in 2003 and has raised it by at least 10% nearly every year since. Its competitive advantages should ensure that those dividend hikes continue well into the foreseeable future, likely for decades.
Microsoft is currently the world’s most valuable company at a market cap of more than $3 trillion, and it enjoys a leading market position in a wide range of categories, including enterprise software, led by its Office suite, cloud computing where Azure is gaining market share on Amazon Web Services, and its Windows operating system, which dominates the market in PCs.
The tech giant is also only one of the two companies, along with Johnson & Johnson, to earn a AAA credit rating from Standard & Poor’s, and it’s established itself as a leader in AI, forging a close partnership with OpenAI.
Given those strengths, Microsoft looks like a good bet for dividend growth over the long term.
2. Taiwan Semiconductor
If you’re looking for dividends from the tech sector, the semiconductor industry is one of the best places to look, and Taiwan Semiconductor (NYSE: TSM) is one of the best options in the industry.
The company is the world’s largest contract-chip manufacturer, with about 60% of market share of total third-party chip supply, serving customers like Apple, Nvidia, Broadcom, and Advanced Micro Devices. It makes approximately 90% of the advanced chip production in the foundry market.
TSMC is also highly profitable with operating margins that hover around 40%, and it’s one of the largest companies in the world with a market cap of $800 billion. Currently, it offers a dividend yield of 1.4%, and the company aims to pay a sustainable and increasing dividend.
Like Microsoft, Taiwan Semiconductor also looks positioned to benefit from the emergence of generative AI, as many of the top chip designers, like Nvidia, rely on it to make their chips.
3. Oracle
The last dividend-paying tech stock worth buying today is Oracle (NYSE: ORCL). Some investors might regard the legacy tech company as something of a dinosaur in the industry, but that’s a mistake. In fact, the stock has a steady track record of outperforming the market over the last decade.
Oracle may be best known for its database-management system and for the Java programming language, but these days the company is seeing explosive growth from demand for new data centers and its cloud-infrastructure services, driven by the growth of generative AI. The company also developed a close relationship with Microsoft and Nvidia, which is helping to fuel its growth.
In its most recent quarter, cloud-infrastructure revenue jumped 49% to $1.8 billion, and the company’s backlog, measured by remaining performance obligations, is also growing quickly, up 29% to $80 billion, showing that demand is growing faster than its ability to serve it.
Oracle currently pays a dividend yield of 1.3%, and the company has a history of robust dividend increases since it began paying one in 2009.
With its ongoing data-center ramp, growth of generative AI, and partnerships with Microsoft and Nvidia, Oracle looks like a dividend stock for tech investors to buy and hold.
Should you invest $1,000 in Microsoft right now?
Before you buy stock in Microsoft, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $671,728!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of May 28, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon, Broadcom, and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Oracle, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends Broadcom and Johnson & Johnson and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
3 Dividend-Paying Tech Stocks to Buy in June was originally published by The Motley Fool
Signup bonus from
