History tells us the best thing you can do with your cash is buy dividend stocks. Numerous studies reinforce the idea that dividend stocks outperform non-paying ones by a wide margin.
Several years ago, J.P. Morgan Asset Management found that stocks that initiated and then raised their payouts over the 40-year period between 1972 and 2012 returned an average of 9.5% annually, vs. just 1.6% for non-dividend-paying stocks. Over rolling three-year periods, the higher-yielding securities beat the low- and non-dividend-yielding securities about two-thirds of the time.
Similarly, the asset managers at Hartford Funds found dividend-paying stocks contributed 41% to the total return of the benchmark S&P 500 going all the way back to 1930. Even during the so-called "lost decade" of the 2000s, when the tech stock bubble burst, the tragedy of 9/11 occurred, and the housing market crashed, dividend stocks gained 1.8% while the S&P 500 suffered negative returns.
Tech stocks have fallen somewhat out of favor again this year, but here are two exceptionally strong dividend-paying stocks to consider investing in right now.
1. Motorola Solutions
Public safety communications leader Motorola Solutions (MSI 0.94%) is a solid business with a safe dividend yielding 1.9% annually. There has never been more of a need for its broad suite of solutions for law enforcement in a world of heightened accountability, and business has been growing quickly.
Motorola is arguably best known for radio systems. The company also offers best-in-class body cameras, in-car video systems, digital evidence management, and computer-aided dispatch that rivals those offered by its primary competitor Axon Enterprise (NASDAQ: AXON), which has dominated the law enforcement market for years.
Motorola's strategic inroads continue to show up in its financial statements. Revenue rose 13% in the third quarter after a several contract wins in North America and internationally, gross margins widened 15%, and operating earnings expanded by 28%.
Motorola Solutions began making dividend payouts the year after its split from Motorola Mobility (which was acquired by Alphabet and then by Lenovo), and it has increased them annually. Over the past decade, the quarterly payment has grown from $0.22 per share to $0.79 per share today, after its most recent hike of over 11%.
The stock has grown, too, up over 55% in 2021, but with a solid business and future growth prospects, it's a tech stock worth the premium.
2. Mobile TeleSystems
One of the highest-yielding tech stocks you can buy is Russian telecom giant Mobile TeleSystems (MBT), which has a dividend that fluctuates based on its operating performance but is currently yielding about 13% annually. It recently announced its dividend payments for the first half of 2021 amounted to 10.55 rubles per share ($0.14 at the current exchange rate) or 21.10 rubles ($0.29) per American depository share (ADS).
Better known as MTS, the telecom has enjoyed steady if not spectacular growth rates as Russia has high penetration rates in wireless communications, but like the U.S. and Europe, it is undergoing an upgrade cycle in infrastructure from 4G to 5G networks. The rural parts of the country, for which the expanse is enormous, provide a significant opportunity for MTS. Like the rest of the world, its data consumption is growing and provides sales growth and good margins.
But MTS has not waited simply for the telecom market to expand to the next phase so it can grow. It has become a conglomerate with its finger in the pies of finance, cloud computing, and streaming services. They're a far smaller component of total revenue, but they're growing much faster.
Bank clients grew to 2.8 million, with half of them actively using its app, allowing its retail loan portfolio to grow 54% to 216.5 billion rubles. Streaming subscribers grew 9% to 3.5 million, or double its number from last year, while total media viewers reached 7.8 million.
MTS stock is cheap, going for less than eight times trailing earnings and just a fraction of next year's estimates. With plenty of growth in store, it's a dividend-paying tech stock worth scooping up right now.