Dreaming in Dividends: 7 Tech Stocks That Pay You While You Sleep
When the subject of passive income comes around, you’re not always thinking about dividend tech stocks. Instead, the ideas usually center around giant consumer goods companies, banks or utility firms – you know, institutions that are hardly exciting but command everyday relevance.
Still, it’s time to show some love to dividend tech stocks. Admittedly, with the furor regarding artificial intelligence and the blockchain these days, it’s easy to think that publicly traded innovators are all about capital gains. And that’s true for the usual suspects. However, dig around and you’ll find some compelling tech firms that pay you will you sleep.
Now, let me be 100% clear: I’m not suggesting you abandon the capital gains approach. After all, I’m a cryptocurrency investor. Saying that would be hypocritical. What I am saying is that don’t ignore the below dividend tech stocks. They’re mature enterprises but they certainly have their charm.
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Taiwan Semiconductor (TSM)
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A multinational semiconductor contract manufacturing and design company, Taiwan Semiconductor (NYSE:TSM) is one of the most valuable enterprises in the world due to its importance for the global computer chip supply chain. However, TSM may be getting a bit long in the tooth regarding its growth narrative. Analysts project shares to hit $138.83 on average, which is a very modest target.
Still, I appreciate TSM as one of the credible dividend tech stocks. First, Wall Street experts predict that 2024 sales will land at $84.76 billion, representing 22.1% growth on the top line. On the bottom line, they anticipate earnings per share for fiscal 2024 to be $5.75. That’s a sizable gain from the $5.19 posted last year.
Again, that translates to a credible pathway for consistent passive income. Right now, the company carries a forward dividend yield of 1.65%. Granted, that’s only modestly higher from the tech sector’s average yield of 1.37%. However, the payout ratio sits at 29.71%, providing support for yield sustainability. Thus, TSM ranks among the dividend tech stocks to buy.
Qualcomm (QCOM)
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A wireless communications powerhouse, Qualcomm (NASDAQ:QCOM) is widely known for its special brand of semiconductors. As well, it offers software and services tied to the broader wireless tech industry. As you might imagine, it’s been vital for the 5G rollout. Sure enough, QCOM has enjoyed a solid start to the new year. However, that also presents a bit of a challenge.
Currently, analysts peg QCOM a consensus moderate buy. Their average price target lands at $162.80, which at this moment means nothing. Granted, the high-side target is $180 but the reality is that QCOM may attract more as one of the dividend tech stocks rather than a capital gains play. That’s not a bad gig.
Analysts see 2024 sales landing at $38.09 billion. That represents a 6.3% lift from the $35.83 billion in sales printed last year. On the bottom line, Wall Street experts believe that Qualcomm could generate EPS of $9.73. Last year, this tally came out to $8.43.
Currently, the tech giant offers a forward yield of 1.98%. With 21 years of consecutive payout increases, QCOM is one of the dividend tech stocks to consider.
Amdocs (DOX)
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A multinational corporation founded in Israel, Amdocs (NASDAQ:DOX) specializes in software and services for communications, media and financial services providers and digital enterprises. In the open market, DOX is off to a decent start for an enterprise of its size. However, the company could really be best geared as a hybrid play.
What I mean by that is this: Amdocs offers a mixture of upside rewards and passive income. Per TipRanks, analysts rate shares a consensus strong buy with a $104.17 average price target. Also, the high-side target runs up to $115. Those are solid estimates.
On the financials, experts believe that company sales could hit $5.04 billion, representing a 3% gain from last year. Also, they anticipate EPS to land at $6.50, contrasting nicely with EPS of $5.91 in 2023.
In terms of passive income, Amdocs offers a forward dividend yield of 2.11%. It’s not blistering high but it’s conspicuously above the sector average of 1.37%. Also, the company commands 13 years of consecutive payout increases. Thus, it’s a worthwhile opportunity among dividend tech stocks.
Open Text (OTEX)
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Based in Canada, Open Text (NASDAQ:OTEX) develops and sells enterprise information management software. While a relevant sector in the broader innovation space, OTEX admittedly isn’t off to a great start this year. Still, the red ink may offer an opportunity for speculators. Analysts peg shares a consensus strong buy with a $48.40 average price target. Further, the high-side target runs to $53.
Those are solid estimates for most companies in terms of forward-12-month-looking forecasts. It’s also credible because Open Text ranks among the top dividend tech stocks. Per Wall Street experts, the company could see revenue of $5.93 billion at the conclusion of fiscal year 2024. That would come out to a 32.2% sales increase from last year.
In terms of profitability, analysts project EPS to land at $4.61 by year’s end. If so, that would be a huge leap from $3.29, posted in 2023. Turning to passive income, Open Text offers a forward yield of 2.64%. Also, the payout ratio sits at only 19.54%, providing confidence for yield sustainability. Thus, it’s an intriguing candidate for dividend tech stocks to buy.
Seagate Technology (STX)
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A data storage company, Seagate Technology (NASDAQ:STX) is one of the top players in the hard disk drive (HDD) space. Notably, STX has gotten off to a solid start this year. Recently, Trexquant Investment LP took on a $1.36 million position in STX stock, demonstrating Seagate’s relevance and resilience amid huge changes in the tech ecosystem.
Just as well, the company is attempting to hold up the fort on the financial end of the spectrum. By the end of the current fiscal year, analysts anticipate that revenue will land at $6.5 billion. If so, that would lead to a $12 decline against last year’s tally of $7.38 billion. That’s not great. However, by 2025, they project sales to hit $8.66 billion. Moreover, the high-side estimate calls for sales of $9.75 billion.
Notably, though, EPS in 2024 should ping at 73 cents, well above last year’s 19-cent print. In turn, Seagate offers a forward yield of 2.84%. The payout ratio, while elevated at 58.71%, is reasonable. Therefore, investors interested in dividend tech stocks may want to give STX another look.
Ituran Location and Control (ITRN)
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Based in Israel, Ituran Location and Control (NASDAQ:ITRN) provides stolen vehicle recovery and tracking services. In addition, it markets GPS wireless communication products. Given the rise in property theft – particularly regarding motor vehicles – ITRN stock could be cynically relevant. Admittedly, shares didn’t get off to a great start but the framework could easily change for the better.
Whether for cynical reasons or not, analysts anticipate rising growth for Ituran. By the end of this fiscal year, experts believe that the company will post revenue of $342.9 million. That would be up 7.2% from last year’s haul of just under $320 million. By the end of 2025, revenue could clock in at $377.7 million. That would be up over 10% from 2024’s projected sales.
On the bottom line, experts see ITRN’s EPS to land at $2.49 this year, an improvement over last year’s $2.40. In terms of passive income, Ituran carries a forward yield of 5.89%. Even better, the payout ratio is reasonable for such a high yield at 56.73%. Thus, it’s one of the tech dividend stocks to keep on your radar.
Himax Technologies (HIMX)
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A fabless semiconductor manufacturer, Himax Technologies (NASDAQ:HIMX) is a name I’ve discussed extensively. Part of the reason is that – aside from its relevance – HIMX stock is undervalued. Right now, shares trade hands at 19.17X trailing-year earnings. That’s lower than almost 67% of the competition. It also trades at 1.17X tangible book value. That’s lower than nearly 83% of its peers.
Admittedly, analysts have some questions about 2024’s revenue performance, which may explain some of the disappointing price action. By the end of this year, experts believe that Himax will only print sales of $901.25 million. That would fall short of last year’s tally of $945.45 million by 4.7%. However, the good news is that they also believe revenue will land just above $982 million by 2025.
On the bottom line, analysts project 2024 EPS to be 35 cents, above last year’s 29-cent performance. And 2025 could land earnings of 48 cents per share. Subsequently, Himax’s forward dividend yield of 8.66% might seem excessively high. However, it appears to have the goods to back it up.
Finally, Robert W. Baird sees shares hitting $7 over the next 12 months. That makes it one of the tech dividend stocks to buy.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
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