If the recent volatility in the stock market has you looking for less stressful alternatives and/or has made you curious about making a turn to investing in dividend-paying companies, you've come to the right place. One of the best things about dividend stocks is that the daily ups and downs of the market can't take your dividends away.
And among the dividend stocks other there to research, mature technology companies are often great dividend stocks because they have a habit of passing down profits to shareholders.
Let's take a closer look at three high-yielding technology stocks to consider in February.
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1. Broadcom: 2.7% dividend yield
Semiconductors are like the little engines that make a lot of technology go. Everyday devices ranging from smartphones to computers to cars to refrigerators to healthcare devices and more all need semiconductors to work. Broadcom (AVGO 3.84%) makes semiconductor products for connected devices, including 5G, cloud applications, wireless technology, and smartphones. The company also operates a mainframe software business, but Broadcom's primary focus is semiconductors.
AVGO Dividend data by YCharts.
Broadcom's dividend track record isn't as extensive as those of other dividend stocks, but it's raised its dividend for 12 consecutive years. However, management has bumped the payout quite a bit in recent years, raising it an average of 50% per year over the past five years! The dividend payout ratio is just 46% of cash flow, so not only is the payout affordable for Broadcom, but the company could continue growing it moving forward.
The company has solid operating momentum, too -- revenue's grown 10% annually over the past three years. With 5G and the Internet of Things (IoT) as future growth drivers, Broadcom seems poised to continue paying increasingly large amounts of cash to investors.
2. International Business Machines: 4.9% dividend yield
International Business Machines (IBM -1.05%) is a technology conglomerate that provides computing hardware, software, and services worldwide. The company is one of the oldest in the technology sector, going back to the early 1900s when it was founded as a tabulating machine maker. Today it sells integrated computing solutions, meaning it can consult on an application, and then sell you the needed hardware and software to accomplish what you're trying to do.
IBM Dividend data by YCharts.
IBM is a Dividend Aristocrat that's raised its dividend annually for the past 26 years and counting. The company's had to slow its dividend raises in recent years as the business invests in evolving its business away from its legacy hardware business, but the payout is still well funded at just 56% of the company's cash flow. The dividend growth could pick back up in the future once revenue is growing consistently again, but investors should feel pretty good about the dividend's security in the meantime.
Software has become an increasingly larger part of a business, and while IBM does compete in various software businesses, its computer hardware business has suffered. Revenue growth has contracted as a result; the company's top line has shrunk an average of 3% per year over the past decade. IBM's invested in bringing growth assets onboard, including a blockbuster deal to acquire software company Red Hat for $34 billion in 2019.
3. Texas Instruments: 2.6% dividend yield
Semiconductor chip-maker Texas Instruments (TXN 1.27%) makes chips for various end markets, including industrial, automotive, and personal electronics. These markets are where most of its chips go, making up 86% of its business.
TXN Dividend data by YCharts.
Texas Instruments is on track to become a Dividend Aristocrat within the decade; its dividend growth streak stands at 18 years. The company's aggressively raised its payout over the past decade, with the average dividend raise each year coming in at nearly 23% over that time. However, you can see in the above chart that the dividend payout ratio has risen as well, so investors should probably expect these annual raises to level off somewhat in the years to come.
The company's revenue has averaged low-single-digit growth over the past decade, but it's accelerated in recent years. There's currently a global semiconductor shortage, especially in industries like automotive, where Texas Instruments has a significant presence. The demand for semiconductors seems strong moving forward, so Texas Instruments could continue enjoying more growth in the near term.
