Not all technology stocks are the high risk/high reward, volatile stomach-churners that have had investors pulling their hair out over the past year. Some blue chips happen to be technology companies that pay dividends.
Adding them to your portfolio can help you diversify and generate passive income while the stock market digests banking fears, political tensions, and a potential recession.
Here are three dividend-paying tech stocks you can buy right now that will help you sleep well at night and pay you for holding them.
1. A networking superstar stock
Cisco Systems (CSCO -0.27%) has helped the world connect since the invention of the internet in the early 1980s; the company sells hardware and software products for networking and information technology.
It has remained a vital enterprise vendor, surviving economic ups and downs by keeping relevant as new generations of technology hit the market. Today, the company does more than $53 billion in annual revenue.
The company has paid and raised its dividend for 12 consecutive years, and investors can enjoy a 3% yield at the current share price. A healthy 55% dividend payout ratio supports it, so investors shouldn't have to worry about management cutting the dividend anytime soon.
It's not the fastest-growing dividend, averaging low single-digit increases over the past few years. But the business has shown momentum in recent quarters.
CSCO payout ratio data by YCharts.
Analyst estimates call for earnings per share (EPS) to grow by an average of 6.5% annually over the next several years. That's a solid combination of growth and dividend yield in an attractively valued package. The stock's price-to-earnings (P/E) ratio is 13 times 2023 estimates, so investors looking for a discounted blue chip with solid prospects can start here.
2. Semiconductors, calculators, and dividends, oh my!
Most people probably know Texas Instruments (TXN -1.13%) for its calculators, but that's a tiny sliver of its business. It is one of the world's largest semiconductor companies, which is how it makes most of its revenue.
The company specializes in analog and embedded processing chips for industrial, automotive, and personal electronics applications. Annual sales come in at around $20 billion.
Texas Instruments has a solid dividend reputation, raising its payout for 19 years. The stock's 2.7% yield won't knock your socks off, but give the payout enough time to grow, and you might be happy you did. Increases have averaged 18% over the past five years. And the company's payout ratio is still just 49%.
TXN payout ratio data by YCharts.
Long-term demand for semiconductors could drive solid growth. Meanwhile, shares command a P/E of 23 using 2023 EPS estimates. The stock isn't a bargain, but the price seems fair, given its long-term average P/E of 22.
Texas Instruments could offer long-term investors more double-digit dividend raises thanks to its expected earnings growth and low payout ratio.
3. A materials stock behind most technology
Corning (GLW 0.19%) is a materials company specializing in components used to make various electronic displays and the fiber optics used for cables and connectors. It's also pursuing opportunities in renewable energy and life sciences.
You can think of Corning as a company that makes building blocks for technology, and annual sales total more than $14 billion.
The company has also become a strong dividend stock by raising its payout for 12 years, and offers investors a 3.2% yield at today's price. The payout ratio is a little high at 70%, but Corning endured some challenges in 2022, including inflation and problems with production and its supply chain. Management expects an improvement in 2023, so the payout ratio could improve.
GLW payout ratio data by YCharts.
Analysts believe Corning can grow EPS by an average of 7% annually for the next few years, which could fund inflation-beating dividend increases without stressing the payout ratio.
Shares trade at a forward P/E of 17, a slight discount to the broader market's P/E of 18. That seems fair, considering its expected earnings growth slightly trails the market's historical average (about 10%). The numbers paint Corning as a fairly valued dividend stock worth considering as an outside-the-box technology investment.
