When many investors think about tech stocks, they often think first about high-growth names that come with outsized risk -- not mature, dividend-paying businesses that offer steadier, lower-risk returns. Its far too easy to forget that the tech sector includes some of the juiciest dividend stocks the market has to offer.
That said, here are three high-yield tech stocks I think are worth buying in August:
1. American Tower: A leading wireless infrastructure play
With a 3.4% yield backed by a portfolio of nearly 226,000 communications tower sites around the world, American Tower (AMT -0.70%) is a bastion of strength among dividend-paying tech stocks.
American Tower is a real estate investment trust, or REIT, so it's required to pay out at least 90% of its taxable income to shareholders in the form of dividends each year. And despite facing a number of headwinds this year eating into its cash flows -- from rising interest rates to unfavorable foreign currency exchange and M&A consolidation among its clients -- American Tower stock enjoyed a modest rally last week after the company's stronger-than-expected second-quarter 2023 report showed that (in the words of CEO Tom Bartlett) those "customers continued to invest in their networks to meet growing demand."
As a result, American Tower raised its full-year outlook for total property revenue; adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA); and adjusted funds from operations (AFFO) per share.
What's more, noting the vast majority of American Tower's assets are located in the United States, the company has already started selectively expanding internationally to complement its core U.S. business. Looking ahead, management believes "that the network development trajectory we have seen will ultimately be replicated overseas."
Over the longer term, American Tower remains a compelling income play for investors willing to buy now and hold as its global growth story continues to play out.
2. AT&T: A telecom giant yielding nearly 8%
Even as the broader markets have rallied, AT&T (T 1.02%) stock has fallen around 24% year to date in 2023, as of this writing, and even hitting a 31-year low last month. For that, we can largely thank a combination of investors favoring higher-risk tech stocks of late, concerns over slowing growth, its hefty debt load (with $134.7 billion in net debt), and more recently, a report last month from the Wall Street Journal detailing potential liabilities telecom giants could have, given risks posed by an aging legacy network of lead-covered cables.
At the same time, in AT&T we're also talking about a company that's not only outperforming rival Verizon on virtually every metric that matters, but also generates a staggering amount of cash with guidance calling for free cash flow of at least $16 billion this year.
Coupled with cost savings initiatives that have already shaved around $6 billion from AT&T's annual expenses over the past few years, as well as a solid dividend that yields nearly 8% as of this writing, and I'm betting investors who buy at these lows and reinvest that payout will be more than pleased with their decision.
3. Universal Display: From growth play to dividend-growth stock
Finally -- and hear me out here -- organic LED (OLED) specialist Universal Display (OLED 1.10%) isn't exactly a high-yield dividend stock today, with a payout yielding a comparatively modest 0.9% annually right now. But I'm including this innovative, massively profitable business in this list because I'm convinced it's a high-yield tech stock in the making.
I've been extolling the virtues of owning Universal Display here at Fool.com for over a decade -- and I've personally owned shares of the OLED technologist since May 2010 (making it a solid 10-bagger in my portfolio excluding dividends). Incidentally, I previously singled out Universal Display as one of the prospective top dividend stocks of the 2020s way back in 2017, noting management had called their first-ever minuscule dividend payment of $0.03 per share (which equated to a tiny annual yield of 0.14% at the time) a "good place to start."
Universal Display has increased its quarterly payout by more than 11-fold since then, to $0.35 per share, and management still suggests the OLED market remains in its earliest stages. Today, Universal Display's technology can be found in a wide array of electronic devices from OLED smartphones to TVs, smartwatches, automobile lights, and general lighting applications.
In addition, when Universal Display handily exceeded expectations with its second-quarter 2023 results last week, management noted that while smartphones and TVs are already significant revenue sources, they should be followed by electronics manufacturers rolling out new OLED versions of tablets and laptop computers en masse starting in 2024.
Even then, I continue to believe we've only begun to scratch the surface of the potential for OLED devices; while we've begun to see some devices (mostly smartphones and tablets) with flexible, foldable displays enabled by OLED tech, for example, we've yet to see any meaningful commercialization utilizing OLEDs' rollable, semitransparent features that could make OLED adoption that much more compelling for investors and electronics enthusiasts alike.
Over the longer term, as adoption and innovation surrounding OLED technology continues to grow, I'm excited to watch Universal Display's dividend payout continue to follow suit.
