While the innovation ecosystem has dominated business headlines, investors may want to consider a safer approach with tech dividend stocks to buy. It all comes down to the rotation of the smart money.
According to a Reuters article earlier in March, publicly traded tech enterprises saw $4.4 billion of outflows. That was the largest ever outflow over a single-week period, per analysts from Bank of America. Subsequently, money has been flowing into investment-grade bonds. That makes sense – the smart money senses the tech play has become overheated.
Of course, innovation will always be the cornerstone of modern economies. So, given the flight to safety, it may be best to meet in the middle. Below are tech dividend stocks to buy as risk-on sentiment fades.
Broadcom (AVGO)
Operating under the semiconductor banner, Broadcom (NASDAQ:AVGO) designs, develops and supplies various computer chips. In particular, the company focuses on complex digital and mixed signal complementary metal oxide semiconductor-based devices. Since the start of the year, AVGO stock moved up 21.5%.
Financially, Broadcom isn’t about the glitz and glamor. However, it’s one of the top tech dividend stocks to buy thanks to its reliability and consistency. In the last fiscal year, the company beat its quarterly estimates for earnings per share. Overall, the average positive earnings surprise came out to 2.78%.
For fiscal 2024, analysts are looking at EPS of $46.86 on revenue of $50.36 billion. That implies a gargantuan increase of 40.6% on the top line compared to last year’s print of $35.82 billion. Further, fiscal 2025 revenue may rise to $57.19 billion.
Currently, Broadcom offers a forward annual dividend yield of 1.58%. Covering experts rate shares a consensus strong buy with a $1,577 price tag, implying 20% upside potential.
Taiwan Semiconductor (TSM)
A chip manufacturing powerhouse, Taiwan Semiconductor (NYSE:TSM), together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. Per its public profile, TSMC provides complementary metal oxide silicon wafer fabrication processes to manufacture logic, mixed-signal, radio frequency, and embedded memory semiconductors. Since the start of the year, TSM stock gained almost 35%.
To be sure, with the company’s tremendous relevance to the computer chip supply chain, TSMC mainly offers capital gains potential. However, it’s one of the top tech dividend stocks to buy. Financially, the company continues to enjoy consistently solid performances. Over the past four quarters, the average positive earnings surprise came out to 7.73%.
For fiscal year 2024, experts believe TSMC will post EPS of $5.76 on revenue of $84.49 billion. That’s a robust improvement over last year’s print of $5.19 per share on sales of $69.4 billion.
For passive income, TSMC offers a forward yield of 1.47%. Combined with a unanimous strong buy rating, Taiwan Semiconductor should be on your radar.
Qualcomm (QCOM)
A tech giant that’s focused on the broader connectivity sphere, Qualcomm (NASDAQ:QCOM) engages in the development and commercialization of foundational technologies for the wireless industry worldwide. Per its corporate profile, Qualcomm operates through three segments: a technologies unit, a licensing division and a segment for strategic initiatives. Since the beginning of the year, QCOM popped up nearly 21%.
Financially, Qualcomm doesn’t exactly offer exciting performances. However, it’s been demonstrating consistent improvement. In the first quarter of last year, QCOM met the consensus earnings target of $2.15 per share. By Q4, the company posted EPS of $2.75, beating the estimate of $2.37. Overall, the positive earnings surprise came out to 6.28%.
For the current fiscal year, analysts anticipate Qualcomm to deliver EPS of $9.76 on revenue of $38.13 billion. Last year, the print was $8.43 per share on sales of $35.83 billion.
Currently, the tech firm offers a forward yield of 1.92%. QCOM enjoys a moderate buy rating with a high-side estimate of $200.
Microchip Technology (MCHP)
An intriguing idea for tech dividend stocks to buy, Microchip Technology (NASDAQ:MCHP) develops, manufactures, and sells smart, connected, and secure embedded control solutions in the Americas, Europe, and Asia. According to its corporate profile, the company offers a variety of microcontrollers for multiple industries, including automotive, industrial, computing, and communications, among many others.
Since the start of the year, MCHP only moved up slightly over 3%. However, in the past 52 weeks, it gained almost 15%. To be fair, it’s not exactly lighting up the board. However, it does enough to stay at least on target with analysts’ earnings expectations. In the past four quarters, Microchip’s average positive earnings surprise came out to 1.4%.
Admittedly, concerns exist about the forward projections. For fiscal 2024, experts project EPS of $4.91 on sales of $7.66 billion. That’s disappointing compared to last year’s print of $6.02 on sales of $8.44 billion.
However, the underlying microcontroller market should expand at a compound annual growth rate (CAGR) of 10.5% from 2024 to 2029. Combined with the company’s 1.95% forward yield and low trailing-year earnings multiple of 20.15X, it’s an idea to keep in mind.
Texas Instruments (TXN)
A well-known entity among tech dividend stocks to buy, Texas Instruments (NASDAQ:TXN) designs, manufactures, and sells semiconductors to electronics designers and manufacturers in the U.S. and internationally. Per its corporate profile, the company operates through its Analog and Embedded Processing segments. It specializes in a variety of advanced solutions, including controllers and digital signal processing for mathematical computations.
Since the start of the year, TXN has moved up 2%. And in the past 52 weeks, it’s down almost 3%. While these aren’t exactly groundbreaking performance stats, Texas Instruments is known for its consistency. Last fiscal year, it beat expectations for EPS. Overall, the average positive earnings surprise in the last four quarters landed at 3.3%.
For fiscal 2024, circumstances are less auspicious, with experts anticipating EPS of $5.09 on revenue of $15.61 billion. These are disappointing figures compared to per-share profits of $7.07 on sales of $17.52 billion last year. Still, there could be a recovery in fiscal 2025, with the high-side estimate calling for EPS of $8.65 on revenue of $21.27 billion.
Don’t forget, TXN offers a forward dividend yield of 3.1%, which could make it a nice diversification option.
IBM (IBM)
Falling under the information technology (IT) services subsector, IBM (NYSE:IBM) represents one of the go-to tech dividend stocks to buy. It’s not one of the popular innovation players but then again, that’s what makes the enterprise appealing to contrarians. Per its public profile, the company operates through its Software, Consulting, Infrastructure and Financing segments.
While Big Blue has been a frustrating entity for many years, it finally started to find its mojo. Since the start of the year, IBM stock has gained over 18% of equity value. In the past 52 weeks, it’s up almost 48%. Financially, it hasn’t been exciting but it has delivered in terms of consistency, beating EPS targets in fiscal 2023. Over the past four quarters, IBM printed an average positive earnings surprise of 5.6%.
For fiscal 2024, analysts anticipate EPS to clock in at $10.10 on revenue of $63.8 billion. Last year, the company posted per-share profits of $9.62 on sales of $61.86 billion.
Lastly, the legacy tech firm offers a forward dividend yield of 3.52%. It’s one to put on your radar if you want stable passive income.
HP (HPQ)
Operating under the computer hardware subsegment, HP (NYSE:HPQ) represents the riskiest idea on this list of tech dividend stocks to buy. Per its corporate profile, HP provides personal computing and other digital access devices, imaging and printing products. It operates through three segments: Personal Systems, Printing and Corporate Investments. However, with calls regarding the death of PCs, HPQ seemingly suffers from a product evangelism challenge.
However, the latest data suggests that such pessimism may be premature. Further, with the gig economy expanding, people will likely need more PC solutions, not fewer. Interestingly, HP has been consistently meeting expectations. Over the past four quarters, the company’s average positive earnings surprise comes out to 1.33%. No, it’s nothing earthshattering. However, the print isn’t negative.
For fiscal 2024, analysts anticipate EPS to land at $3.42 on revenue of $53.7 billion. That’s an improvement from last year’s EPS of $3.28 while matching the top line. However, it wouldn’t be shocking to see HP reach toward the upper end of the projected sales spectrum at $54.28 billion.
Finally, the company offers a forward dividend yield of 3.68%, making HPQ an enticing idea.
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.