Technology stocks aren't just for the risk-taking growth-seekers out there. If you're more conservative or want some income from your investments, tech stocks can still be a key contributor to your portfolio. With that in mind, let's investigate three technology companies with excellent track records and strong fundamentals that can be great ideas to buy this month.
1. Verizon Communications
A small group of companies dominates the wireless phone industry in the United States, and Verizon Communications (VZ +0.17%) is one of them. The company operates a nationwide network, with nearly 30% of America's cellular subscribers under its wing.
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Telecommunications is a unique business; it requires massive investments to build and maintain the towers and other infrastructure that make a wireless network run. These expensive investments create a moat from new competitors because few businesses in their right mind are likely to invest tens of billions of dollars in the hope that they might compete with the existing industry leaders.
Our cellphones are more critical to daily life than ever. Many people work, socialize, pay bills, or game on their cellphones. Consumers pay their phone bills just like they pay for heat, water, and electricity, making Verizon's business very stable.
VZ Dividend Yield data by YCharts
Whatever profits Verizon has left over after funding its core business it gives its shareholders in the form of a dividend. The dividend yield is currently 4.7%, and the company has increased the payout for the past 17 years. The 4.7% yield is higher than it typically offers, and the payout ratio is decreasing, which shows that Verizon can easily afford to pay it. When a stock's dividend is safer and pays more than in years past, it could be time to buy.
2. Roper Technologies
Most investors might not be familiar with Roper Technologies (ROP +0.96%). The company develops software and engineered solutions for industrial companies, so it doesn't get much exposure to the everyday consumer. But Roper is a Dividend Aristocrat, meaning it's increased its dividend for at least 25 years, 28 years to be exact.
Roper serves customers in industries like applications software, network, and communications, measurement and analytics, and process technologies. Roper strategically acquires specialized, profitable small businesses and integrates them into its broader business.
That can be a risk if it buys low-quality companies or do a lousy job integrating them, but Roper's growth reflects its solid execution. Revenue and earnings per share have grown at an average of 8.7% and 10.4% per year, respectively, over the past decade.
ROP Dividend Yield data by YCharts
Roper isn't going to be an outstanding income stock; its dividend yield is just 0.5%. However, the payout ratio is a super manageable 20%. The business is growing at a high-single-digit pace, so investors can potentially enjoy good total returns from both the dividend and share price appreciation over time.
Visa
Many people are familiar with the payment network Visa (V 0.55%) because they use Visa-branded payment cards every day, but few are aware of how great a business it is. Every time you swipe that debit or credit card with Visa's logo on it, the company gets a little cut of that transaction from the merchant.
You can think of Visa's business as a toll booth that gets paid as money flows back and forth across its network that bridges the gap between us, our banks, and the companies where we spend our money.
Like Verizon, Visa is part of a tiny group that controls its industry, which includes companies like Mastercard and American Express. Visa is the market leader, with nearly 50% market share of credit cards issued worldwide. What's great about Visa its that its fee is a percentage of the transaction, not a fixed amount. Its revenue grows with inflation as goods become more expensive and transaction values rise.
V Dividend Yield data by YCharts
Like Roper, Visa is a faster-growing business that pays a dividend with a small yield, just 0.6%. However, the dividend payout ratio is small and leaves room for years of dividend increases down the road. Visa has grown revenue and earnings per share at an average of 10.1% and 15.9% per year, respectively, over the past decade. Investors can reasonably expect a mix of rising dividends and share price appreciation as long as Visa keeps up its current growth.
