While the innovation ecosystem generally focuses on growth opportunities, investors seeking a more balanced approach can elect tech stocks with passive income. These ideas are established businesses that may not have the outright capital gains potential of their high-flying peers. However, they pay dividends, which could come in handy.
Notably, the Federal Reserve may decide to cut interest rates down the line. That’s still a tricky issue but if a dovish policy does materialize, private enterprises that pay dividends won’t have to compete as much with government bonds. There’s arguably no safer debt than the certificates issued by Uncle Sam. So, without this overhand, dividend payers can thrive.
At the same time, innovation remains the name of the game. Through tech stocks with passive income, you can get the best of both worlds. Below are some compelling ideas to consider.
Clear Secure (YOU)
Based in New York City, Clear Secure (NYSE:YOU) falls under the application software industry. Specifically, the company operates as a secure identity platform under the Clear brand name. Per its public profile, Clear’s multi-layered infrastructure facilitates virtual queuing conveniences. Essentially, travelers under this system can breeze through airport security checkpoints, saving time and much hassle.
To be sure, the business has come under controversy for certain security vulnerabilities. Nevertheless, it’s difficult to argue with the results. From the second quarter of last year to Q1 2024, the average earnings surprise came out to a stunning 69.05%. In the trailing 12 months (TTM), Clear posted net income of $52.14 million on sales of $660.27 million.
Currently, the tech firm’s quarterly revenue growth rate clocks in at 35.3%. For fiscal 2024, experts anticipate earnings per share to reach $1.09 on sales of $747.32 million. Against the prior year, EPS would be up 87.9% whereas sales would gain 21.8%.
At the same time, Clear Secure also provides a forward dividend yield of 2.39%. It’s one of the enticing tech stocks with passive income.
CSG Systems (CSGS)
Based in Englewood, Colorado, CSG Systems (NASDAQ:CSGS) operates in the infrastructure software realm. Along with its subsidiaries, CSG provides revenue management and digital monetization, customer experience and payment solutions, primarily to the communications industry. The company offers a range of solutions under a Software as a Service (SaaS) business model.
Financially, the company doesn’t deliver the most exciting print. However, it makes up for it in terms of consistency. In the past four quarters since Q1 2024, CSG’s average positive earnings surprise came out to 10.43%. Over the TTM period, net income landed at $64.78 million on revenue of $1.17 billion.
For passive income, CSG offers a forward yield of 2.85%. Notably, the payout ratio sits at 27.87%, thus providing reassurances regarding yield sustainability. Also, the company enjoys 11 years of consecutive payout increases. That’s a statistic management will want to keep moving in the right direction.
For fiscal 2024, analysts see EPS expanding about 10% to $4.05. Further, the top line should grow by 4.7% to reach $1.13 billion. Overall, it’s a solid example of tech stocks with dividends.
Skyworks Solutions (SWKS)
Hailing from Irvine, California, Skyworks Solutions (NASDAQ:SWKS) falls under the semiconductor sector. Along with its subsidiaries, the company designs, develops, manufactures and markets proprietary semiconductor products in the U.S. and other key international markets. Among its mainline products are amplifiers, antenna tuners, attenuators and automotive tuners.
As with other established tech stocks with dividends, Skyworks doesn’t deliver the snazziest financial disclosures. However, it’s a consistent workhorse. Over the past four quarters since Q1, its average earnings surprise landed at 2.4%. In the TTM period, net income landed at $855.2 million on sales of $4.54 billion. Its profit margin stands at 18.85%.
Right now, the company’s forward yield sits just under 3%. Further, the payout ratio lands at around 41.15%, meaning that investors shouldn’t have to fret too much about yield sustainability. In addition, Skyworks is on 10 years of consecutive payout increases. That’s a status it will want to keep.
To be fair, analysts anticipate a diminishing of the top and bottom lines in fiscal 2024. Still, the red ink makes SWKS more attractive, with a revenue multiple of 3.23X. That’s because sales should start picking up in 2025.
Seagate Technology (STX)
Based in Dublin, Ireland, Seagate Technology (NASDAQ:STX) falls under the computer hardware category. Per its corporate profile, Seagate provides data storage technology and solutions in Singapore, the U.S., the Netherlands and other international markets. Specifically, it’s best known for providing mass-capacity storage products, including enterprise nearline hard-disk drives (HDDs) and solid-state drives (SSDs).
Financially, Seagate is usually good for a robust earnings beat, although Q3 2023 resulted in a slight miss. However, it more than made up for this falloff in Q4, when it posted EPS of 12 cents against an expected loss per share of six cents. In the past four quarters, Seagate’s average quarterly surprise clocked in at 84.25%.
In the TTM period, the tech firm posted a net loss of $270 million on sales of $6.27 billion. For fiscal 2024, Seagate is projected to suffer a 11.6% revenue decline to $6.53 billion. However, patient investors could see a recovery the following year to $8.88 billion.
While waiting, investors can take advantage of Seagate’s forward yield of 3%. Notably, the payout ratio is less than 50%, making it one of the credible tech stocks with passive income.
HP (HPQ)
Headquartered in Palo Alto, California, HP (NYSE:HPQ) is a tricky example of tech stocks with passive income. Falling under the computer hardware category, HP provides personal computing and other digital access devices, imaging and printing products. That may have been a blisteringly strong category two decades ago. These days, investors haven’t quite felt the love.
Nevertheless, HPQ is up over 9% year-to-date. Over time, the underlying company can potentially dismiss notions of the death of PCs. With the Covid-19 crisis forcing a reimagining of the working environment, the gig economy could attract new participants. If so, demand for computer hardware should rise. With HP’s strong presence in the marketplace, it may have surprising capital gains potential.
Helping to make the case for HPQ stock is the underlying forward dividend yield of 3.38%. That’s well above the tech sector average of 1.37%. Further, the payout ratio sits at 29.72%, facilitating confidence in yield sustainability. Plus, with 14 years of consecutive dividend increases, management will want to keep this party going.
Fiscal 2024 sales could be flat at $53.61 billion. However, analysts believe that the following year could see $55.67 billion.
Cisco (CSCO)
Hailing from San Jose, California, Cisco (NASDAQ:CSCO) represents a powerhouse in the communication equipment sector. Per its public profile, the company designs, manufactures and sells internet protocol-based networking and similar products tied to communications and information technology (IT). It’s also a leading enterprise in data center switching and enterprise routing.
To be sure, CSCO isn’t exactly the most riveting idea for tech stocks with passive income. However, it’s definitely worth a closer inspection because of its consistency. In the past four quarters since Q1, Cisco’s average earnings surprise clocked in at 6.45%. Its “worst” bottom-line beat occurred in fiscal Q4, when it posted 3.8%.
In the TTM period, Cisco’s net income landed at $12.12 billion on sales of $55.36 billion. Its profit margin stands at 21.88%. That goes a long way in supporting the company’s forward yield of 3.43%. Notably, the payout ratio is very reasonable at 45%. Also, the company enjoys 13 years of consecutive payout increases.
Analysts anticipate a relatively flat year in fiscal 2024. Looking out to the following year, EPS might dip but with a modest increase in revenue to $55.73 billion.
Himax Technologies (HIMX)
Based in Tainan City, Taiwan, Himax Technologies (NASDAQ:HIMX) operates in the semiconductor sphere. Per its public profile, the enterprise functions as a fabless semiconductor company. Specifically, it specializes in display imaging processing technologies. This core business offers solutions to various front-facing industries, including televisions, PC monitors, laptops, mobile phones, tablets and automotive interfaces, among many others.
Overall, Himax tends to pull out surprises to the positive. For example, in Q1, management disclosed EPS of 7 cents against a consensus target of 5 cents. In the previous sequential quarter, EPS landed at 13 cents, above the 11-cent consensus view. In the TTM period, net income landed at $48.19 million on sales of $908.77 million.
In full disclosure, analysts anticipate a revenue decline of 1.2% to $934.12 million in fiscal 2024. That’s not exactly the most encouraging assessment. However, in fiscal 2025, sales could rise to $1 billion, implying over 7% growth from projected 2024 sales.
Notably, Himax offers a forward dividend yield of 4.5%, handily beating the tech sector average. However, the payout ratio is a bit elevated at nearly 59%, which is something to consider. Still, for speculators, HIMX could rank among the tech stocks with passive income 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.