Dividends and tech stocks don't often go together. Many tech companies are so focused on growth, that there isn't much cash left over at the end of the day to fund a dividend. And yet, there are more dividend-paying tech stocks than you might think.
In fact, if you're looking for a balance between growth and income, dividend-paying tech stocks are a great place to start. On that note, keep reading to see three dividend-paying tech stocks that look ripe for buying in June.
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1. Microsoft
Microsoft (MSFT -3.31%) helped spark the artificial intelligence (AI) revolution with its $13 billion investment in OpenAI -- the start-up that launched ChatGPT last November, showing the world the power of generative AI technology.
Since then, Microsoft has been in a battle with Alphabet, aiming to grab some of Google's dominant market share in search. While Alphabet won praise for its updates to Bard AI at its I/O Conference in May, Microsoft countered by integrating Bing into ChatGPT, and the tech giant seems poised to continue pushing the envelope in AI.
The company also seems well positioned after its most recent earnings report, which showed revenue growth reaccelerated after a slowdown in the December quarter. Revenue rose 7% in the fiscal third quarter, up from 2% growth in the second quarter. Microsoft's Azure cloud infrastructure business continues to deliver strong results with revenue up 16%, and the company's diversification helps cushion it from the uncertainty in the economy.
Microsoft's 0.8% yield might be modest for a dividend payer. But it has a long track record of raising the payout, usually by 10% or more, and that should continue given the growth opportunities in front of it.
2. Taiwan Semiconductor Manufacturing
If you're looking for a combination of dividends and growth, it's hard to beat Taiwan Semiconductor Manufacturing (TSM 2.88%), the world's largest manufacturer of semiconductors. TSMC offers a dividend yield of 1.8%, and the company has a number of competitive advantages that allow it to generate monster operating margins.
It is expensive, difficult, and time-consuming to bring new chip manufacturing capacity online, and that should help TSMC protect those margins. The company is also spending tens of billions of dollars to build two new plants in Arizona, helping it to establish a global footprint.
June looks set to be a promising month for TSMC, with the stock surging over the last week in response to a better-than-expected earnings report and blowout guidance from Nvidia. Nvidia counts on TSMC to manufacture its chips, so good news for Nvidia is good news for TSMC.
If the AI boom drives increased chip demand, TSMC is bound to be a winner.
3. Equinix
Data center real estate investment trust (REIT) Equinix (EQIX -2.59%) might not fit your traditional definition of a tech stock, but if you're looking for dividend payers in the industry, this one deserves consideration.
Equinix currently offers a dividend yield of 1.9% and the company delivers steady growth as demand for data centers has grown, and could be a beneficiary from the AI boom much in the way that TSMC is. Equinix posted 15% revenue growth in the first quarter to $2 billion, an excellent growth rate for a REIT, and it closed around 4,000 deals with more than 3,000 customers in the first quarter, showing the reach of the business.
The company's profitability also improved as Q1 adjusted funds from operations, a key metric in REITs, increased 22% year over year to $802 million, showing how profitable the company is. Management sees the digital transformation continuing to drive demand for its data centers.
Equinix is also set to host an analyst day in June, which could serve as a catalyst for the next dividend jump for the stock. If data center demand continues to grow, Equinix should be a winner.
