Tech stocks are incredibly popular investments, and for a good reason. Technology stocks make up roughly one-third of the entire S&P 500 index, which is a measurement of the 500 biggest U.S.-based publicly traded companies. And that sector as a whole is nearly doubling the performance of the broader index so far this year.
The one argument that people could have against tech stocks is the lack of a dividend. Many tech stocks, because they are on the forefront of innovation, are plowing their profits back into the business. Either they're scaling already successful products, pouring money into research to develop the next big thing, or they are spending millions on graphics processing units (GPUs) to run their artificial intelligence (AI)-based platforms. Often, they're doing all three.
Image source: Getty Images.
That leaves no money for a quarterly or monthly dividend payout that income investors love to receive -- either to reinvest into their portfolios to advance their wealth or to pay monthly living expenses as they settle into a comfortable retirement. But with some stocks, you can have it both ways. If you want to invest in tech stocks that will top the market and also pay a great dividend, look no further than Cisco Systems (CSCO 1.14%), International Business Machines (IBM 2.71%), and Paychex (PAYX 2.61%). All three are good buys right now.
Cisco Systems
Cisco is a well-known provider of networking security solutions, software, and cloud computing. It creates Internet Protocol-based routers and switches that allow information to travel across networks. Revenue in the third quarter of fiscal 2025 (ended April 26, 2025) was $14.1 billion, up 11% from a year ago. Earnings per share (EPS) were $0.62, up a solid 35% from the same period a year ago.
AI has been a big driver of Cisco products, as the company generated more than $1 billion in AI-related revenue in 2024 and plans to at least double that in 2025. Cisco expanded its revenue stream thanks in part to its acquisition of Splunk, a $28 billion deal that closed last year and was designed to help customers improve their networking, security, and AI capabilities.
NASDAQ: CSCO
Key Data Points
Cisco is an example of an established technology company that is still finding ways to grow and outperform the market, rising 15% in 2025. On top of that, Cisco stock pays a 2.3% dividend yield.
International Business Machines
If I think about established tech companies, one of the first that comes to mind is stalwart IBM (nicknamed Big Blue). The company traces its roots back more than 100 years. And while IBM is perhaps best known for its work in developing personal computers, today's IBM is more known for its work in cybersecurity, cloud computing, consulting, and its massive mainframe computers that are used by an estimated 81% of all Fortune 500 companies.
Despite its storied history, Big Blue today moves like a spry stock market powerhouse, gaining 30% so far this year. Its 2019 acquisition of Red Hat helped IBM develop a hybrid cloud-computing business and provided revenue and momentum for IBM's software division.
NYSE: IBM
Key Data Points
The consensus estimate by analysts on Yahoo! Finance calls for IBM's revenue to jump 5.5% this year to $66.2 billion and then rise another 4% in fiscal year 2026. Coupled with IBM's solid 2.3% dividend yield, IBM is the rare combination of growth and income in a technology stock.
Paychex
Paychex is a leading provider of payroll, human resources, employee benefits, and retirement services for companies. The company can handle onboarding, performance management, time cards, and payroll processing. The company's revenue has risen dramatically since 2021, topping the $5 billion mark in 2024.
PAYX Revenue (Annual) data by YCharts.
Paychex now counts more than 745,000 clients, with more than half of its revenue coming from services beyond payroll. Its retirement services division had double-digit growth in 2024 and now has $52 billion in assets under management. Revenue in 2025's fiscal Q4 (ended May 31, 2025) was $1.42 billion, up 10% from a year ago. Operating income fell 11% for the quarter, but that was attributed to the company's $4 billion purchase of fellow human capital management company Paycor, which closed in April.
Paychex's growth in areas outside payroll, in addition to its expansion with the purchase of Paycor, should continue to boost revenue. The company is forecasting revenue in the next fiscal year to increase 16.5% to 18.5% and EPS to grow from a range from 8.5% to 10.5%
Paychex stock is up only 2% so far this year but is gathering momentum for a big jump in the next few quarters. The stock trades at a still-reasonable forward price-to-earnings (P/E) ratio of 26 and has an enticing dividend yield of 3%. Paychex is a buy in my book.
