Tech stocks aren't known for paying big dividends or for being especially cheap. But market conditions in 2022 have put most of these investments on sale, even as solid cash-flow trends are lifting payouts.
With that in mind, let's look at three of the standouts in this sector that offer a nice balance between growth and income. Read on for some good reasons to like Microsoft (MSFT -2.45%), Garmin (GRMN 0.17%), and Walmart (WMT 0.57%).
1. Microsoft
Microsoft is a compelling investment right now, even if you completely ignore its dividend payment. The business grew at a steady 16% rate in the most recent quarter. That stability came courtesy of a diverse portfolio that includes a growing enterprise cloud-services segment that's helping offset declines in areas like PC software and video games.
The stock entered November near its low point for the year. Investors are especially worried about future sales slowdowns as IT budgets tighten. But the long-term outlook is bright for this cash-rich business, which generated $21 billion in operating income this past quarter, up from $20 million a year ago. Its recent 10% dividend hike, meanwhile, confirms that management is prioritizing higher cash returns over time.
2. Garmin
The list of worries for Garmin heading into 2023 is long. The GPS and navigation-device giant recently posted a rare quarterly sales decline as consumers scaled back spending on fitness trackers that were popular through 2021.
But Garmin is on track to post just a modest sales decline in 2022 after revenue surged higher by 19% last year. That stability is a testament to a product portfolio that includes consumer devices like smartwatches, but also high-margin navigation platforms for aircraft and boats.
Garmin has plenty of cash available to invest in research and development so that it continues to lead with popular adventure watches, smartwatches, and auto navigation. In the meantime, its dividend yield crossed 3% as a result of those concerns about weak short-term demand trends.
3. Walmart
Walmart might not seem like a tech stock given its huge physical presence in the retailing world. But consider that its massive e-commerce platform makes it one of the biggest digital sellers on the planet. The chain is also increasingly pushing into areas like digital advertising, marketplace platforms, and even financial tech.
And Walmart's dividend strength is unquestioned. The company boosted its payout in early 2022 to mark its 49th consecutive annual increase.
Sure, the chain is under more earnings pressure this year because of inflation, a strengthening U.S. dollar, and soaring costs in areas like transportation. But Walmart is still aiming for solid sales growth and improving margins into 2023.
Meanwhile, management is almost sure to announce a dividend increase in mid-February that would mark Walmart's 50th consecutive annual increase and usher Walmart into the exclusive club of Dividend Kings.
Investors don't have to wait until early 2023 to own this stock, though. They can buy it at a significant discount right now, and then allow automatic dividend reinvestments to amplify their returns over the long term.
