It's conventional wisdom that young investors, who have decades to wait for their investments to grow before retirement, would target growth stocks. These emerging companies may be riskier, but the upside is higher for anyone who finds the right stocks and can stomach the volatility. It makes perfect sense, especially in today's golden age of technology, that society's youngest and most tech-savvy demographic -- Gen Z includes people born between 1997 and 2012 -- would gravitate toward investing in innovative companies.
Research by The Motley Fool backs up that notion, with a recent study findng that growth stocks are the most popular type of investment among Gen Z in 2025.
However, young people should not write off dividend stocks as a potent wealth-building tool. Passive income isn't just for retirement. In fact, while there are no guarantees in investing, reinvested dividends can turbo-charge a stock's returns over a multidecade time frame.
And if the younger set wants to stick with tech stocks, it turns out that there are some excellent growing and innovative tech companies that just so happen to pay dividends. Here are five dividend stocks that are perfect for Gen Z investors to buy and hold for the long term.
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1. Broadcom
Semiconductors (chips) are technology's building blocks and play a crucial role in the tech sector. Broadcom (AVGO +4.27%) has made its name with chips for networking, but the company has expanded over the years into infrastructure software for corporations. Broadcom is also an underrated player in artificial intelligence (AI), where its networking chips help enable vast AI chip clusters in data centers to communicate quickly and efficiently to process colossal amounts of data.
Broadcom is also already a well established dividend stock. The company has raised its dividend for 15 consecutive years. Broadcom's rampant growth has helped management raise that dividend by an average of 14% annually over the past five years. Given Broadcom's wide-open AI opportunities and a modest 36% dividend payout ratio, Gen Z investors should enjoy many years of healthy dividend increases ahead.
2. Microsoft
Legacy tech giant Microsoft (MSFT 1.33%) is still a top player across many tech markets today. The multitrillion-dollar behemoth has its hands in cloud computing, software, gaming, and, yes, AI. The technology space is seemingly always perilous because innovation can turn a business upside-down relatively quickly. That said, Microsoft might be as close as you'll find to a company that's too big to fail in the tech scene.
NASDAQ: MSFT
Key Data Points
Microsoft continues to grow, but it is more mature than the other companies on this list. It also has built a strong reputation for its dividend, which management has increased for 23 consecutive years. The company's positioning to benefit from AI with its Azure cloud platform and vast corporate customer base makes it a dependable tech stock that Gen Z investors can set and forget for the foreseeable future.
3. Salesforce
Some investors may wonder whether AI can replace certain software products. That's a legitimate concern, but Salesforce (CRM 2.43%), a software industry pioneer, could actually benefit from AI. The company started in customer relationship management (CRM) software, but has evolved into a digital software ecosystem that helps companies run their entire businesses. In these situations, AI can enhance simplicity and improve the user experience.
NYSE: CRM
Key Data Points
Salesforce has been a growth stock for years, but it's starting to show some maturity. The company recently began paying a dividend, so while it doesn't have much dividend history for investors to look back on, there could be an exciting future as the company's dividend grows. The current dividend takes only 15% of the company's estimated 2025 earnings, so there's room for the company to increase it.
4. Alphabet
Most people know Alphabet (GOOG +0.41%) (GOOGL +0.66%) for its Google search engine and YouTube video platform. But the company also boasts a thriving cloud segment and it could also help lead in several emerging technologies, like AI, quantum computing, and autonomous driving through its Waymo subsidiary. As for AI, there might not be a company with a better combination of financial resources, cloud assets, and first-party data to train and integrate AI models.
NASDAQ: GOOGL
Key Data Points
Additionally, investors got some relief recently when news broke that Alphabet would avoid a forced breakup in its antitrust case. That sets this juggernaut up for a bright future. Alphabet is new to the dividend scene, and may hesitate to raise its new payout aggressively while it continues to invest in AI infrastructure. But looking further ahead, Alphabet has the makings of a do-it-all stock that offers young investors of Gen Z a mix of growth with dividends mixed in.
5. Meta Platforms
Social media giant Meta Platforms (META 1.16%) might be the world's best advertising business. It generates billions of dollars in cash profits from the ads it sells to the 3.48 billion people who use its apps, including Facebook, Instagram, WhatsApp, and Messenger, each day. Gen Z investors might also appreciate that CEO Mark Zuckerberg is still in his early 40s, meaning he likely has decades until retirement. Zuckerberg has the company leaning hard into AI with ambitions of breaking free of the smartphone platforms it largely depends on.
Meta Platforms is yet another brand-new dividend stock. And this can be a good thing, as the company could be able to grow its dividend over the coming decades as cash profits pile up and the need to invest in the business eventually subsides. Meta's current dividend payout ratio is less than 8% of its 2025 earnings estimates, giving investors a long runway for dividend growth to look forward to.
