When searching for great stocks to buy, investors often have to choose between dividend income and stock price appreciation through growth. Ideally, they want to find investments that feature both of these core ingredients.
For these investors, 2022 has created a somewhat unique situation where they have a better chance of finding both in one stock. The stock market's swoon in 2022 has pushed dividend yields on several quality stocks higher, especially among a select group of beaten-down tech stocks.
Let's look at a few attractive tech stocks to own as the new year approaches. Read on for some good reasons to consider buying stock in Apple (AAPL +2.65%) and Activision Blizzard (ATVI +0.00%) in December.
1. Apple
As one of the world's most valuable brands, Apple needs no introduction. Its consumer tech products are known to command huge premiums in niches ranging from smartphones to tablets. Apple set several sales records in its most recent quarter and its products and services are likely to dominate over the holiday shopping season, too.
NASDAQ: AAPL
Key Data Points
But income investors might be less aware of Apple's brightening profitability prospects. While temporary challenges like currency exchange rate shifts are pressuring margins today, the iPhone maker's push into services should lift operating income over time. The services business jumped to a record $19.2 billion through September, after all, as paid subscriptions passed 900 million.
This shift will add stability to Apple's business while lifting cash flow -- and that's where a rising dividend comes into play. Apple returned $29 billion to investors last quarter, mainly through stock buybacks. Look for the tech giant's dividend spending to rise over time, just as it has over the last several years.
2. Activision Blizzard
Buying Activision Blizzard stock right now is almost like buying Microsoft stock because of the likelihood that the software giant will soon close its $68.7 billion purchase of the video game developer. But investors can get a premium for taking on the risk that the purchase falls through. And Microsoft pays a solid dividend today after having boosted that payout by 10% earlier in 2022.
In the meantime, Activision Blizzard has many factors working in its favor as an investment. Yes, a few delayed title launches are pressuring 2022 sales and earnings. But those titles will still lift the business when they are released. Activision has a huge pipeline of content launches across major brands like Call of Duty, World of Warcraft, and Candy Crush.
Rival Take-Two Interactive recently told investors that the mobile gaming market is looking weaker in late 2022, in part because digital advertising spending is soft. That development might hurt Activision's King Digital segment.
Still, this dividend-paying stock is well positioned to benefit from the shift toward subscription-based game monetization over the next few years. Joining the Microsoft empire should also give it a clearer path toward virtual reality, augmented reality, and metaverse gaming.
And Activision's modest dividend payment can be considered a bonus that investors can collect as they wait for the Microsoft purchase to conclude and for the video game industry to stabilize following a post-pandemic growth hangover.
