3 Dividend-Paying Tech Stocks to Buy in March

Companies have choices when it comes to what they do with the profits they generate. They can reinvest the money back into the business to fuel growth, potentially generating a flywheel effect. They can save it for some potential use down the road. Another option is repurchasing shares, which in turn makes each remaining share outstanding worth more. Then there are dividends, where the company pays out these excess earnings to stock owners.

Getting paid to own stock can be a great feeling -- it's like getting paid for doing nothing. Dividends are typically paid by mature businesses that have determined they don't have a viable reinvestment option or have nothing left to devote added resources toward. Finding companies that pay dividends while still having growth prospects is lucrative, and these companies can be used as cornerstones in a portfolio.

Three dividend-paying tech stocks that still show growth potential are Microsoft (MSFT 1.82%), Intuit (INTU 1.62%), and Accenture (ACN -0.32%). Let's find out a bit more about them and why now is a good time to buy.

Image source: Getty Images.

1. Microsoft

Microsoft is the third-biggest company by market cap in the world, valued at $2.2 trillion. With such a huge size, investors may think it is difficult for Microsoft to continue having anything in its business to reinvest in. And yet, Microsoft continues to fuel its cloud business growth. It also recently offered to acquire Activision Blizzard with spare cash to bulk up its gaming offering. With the $68.7 billion it offered for the gaming giant, Microsoft could have paid out $9.09 to each shareholder (equating to a 3% dividend). Instead, management believes the profits generated by this new division will far outweigh a one-time payout.

Looking at Microsoft's cloud business during the Q2 of Fiscal 2022 (ending Dec. 31), it pulled in $18.3 billion in sales, which increased at a 26% clip year over year. Overall in Q2, Microsoft generated $51.7 billion in revenue and converted $18.8 billion into net income -- a 36% margin. Without factoring in dividends or share buybacks, Microsoft generates enough net income in a single year to pay for the Activision Blizzard acquisition.

Microsoft is a cash-generating machine and rewarded its shareholders by spending $7.4 billion and $4.7 billion on share buybacks and dividends, respectively, during Q2. Even though Microsoft's dividend yield is a lowly 0.83%, the company's continued growth, which management expects to be 17% at the midpoint of guidance in Q3, is also a factor investors should consider. Growth at that level generally leads to solid stock price appreciation. With a strong business, dividends, and share repurchases, Microsoft is a great cornerstone stock for a portfolio.

2. Intuit

Intuit's wide product lineup helps consumers and small businesses alike to "overcome financial challenges." Many financial tasks (managing taxes, for example) are difficult for individuals or small businesses to take on, and Intuit's TurboTax and QuickBooks assist with it. Without these products, it would be difficult to get a handle on these tasks.

Intuit has made several acquisitions recently, purchasing Mailchimp and Credit Karma in 2021 and 2020, respectively. This helped bolster its financial performance during Q2 fiscal 2022 (ending Jan. 31). Revenue for the quarter was up 70% year over year to $2.7 billion when including both its acquisitions. Without them, Intuit still produced a strong quarter, producing 39% revenue growth year over year. Looking forward, management expects full fiscal year (ending July 31) revenue growth of 27% with acquisitions and 19% without.

Intuit is a force to be reckoned with in individual and consumer finances and has a long way to go before fully penetrating the market. It currently pays out $2.72 per share per year in dividends with a 0.6% yield and its current buyback program still plans $2.5 billion in share repurchases, so shareholders will still be rewarded for owning the stock going forward. Similar to Microsoft, Intuit is a solid company that will consistently provide both profit and dividend growth.

3. Accenture

Nearly all businesses have tech integrated within them, but few have employees with the expertise to implement and manage these solutions. Accenture's consulting and outsourcing business provides engineers with the knowledge and ability to complete most projects presented to it.

A widely diversified company, Accenture is spread across multiple geographies and industries. Its largest industry -- products -- only accounts for 29% of revenue, and its biggest geographical market -- North America -- generates less than half of total sales.

In its fiscal 2022 Q1 (ending Nov. 30) earnings release, Accenture reported revenue of $15 billion, marking a 27% increase over Q1 in the prior year. Because the quarter was so strong, Accenture raised its 2022 business outlook.

Data source: Accenture. 

Clearly, Accenture's business is doing well, and shareholders are reaping the rewards from general growth. It also has the highest dividend yield in this trio of companies, at 1.25%. The shift toward technology has created a demand for businesses to improve their cloud infrastructure as well as security. These are two areas Accenture excels in and will continue to capitalize on for many years.

Investor takeaway

All three businesses are growing and rewarding shareholders for owning the stock. While the dividend yields aren't great now (all three fall below the S&P 500's average yield of 1.4%), they are all growing and are expected to keep growing. The dividend payout ratio for all three companies (Microsoft 24.3%, Intuit 32%, Accenture 36.9%) is very sustainable, leaving plenty of room for further hikes. In the meantime, general business growth will fuel stock price appreciation and provide most of the returns shareholders will see short-term. Consider buying each of these stocks to offset fast-growing highfliers to bring balance to a portfolio.