Building a portfolio with the goal of receiving passive income often leads investors to concentrate on sectors like utilities, finance, or consumer staples. Income-oriented investors often find the technology sector less appealing since these companies usually allocate their profits toward growth. Still, many technology companies reward their shareholders with quarterly payouts.
For those seeking exposure to technology paired with reaping an income, three stocks – Dell Technologies DELL, NetEase NTES, and Broadcom AVGO – could all be prime considerations. In addition to providing payouts, all three sport a favorable Zacks Rank, reflecting optimism among analysts. Let’s take a closer look at each.
Dell Technologies, a current Zacks Rank #2 (Buy), provides information technology solutions. Currently, shares yield a solid 2% annually paired with a sustainable payout ratio sitting at 24% of the company’s earnings. It’s worth noting that shares have seen positive reactions post-earnings in back-to-back releases, with investors pleased with quarterly results. Just in its latest release, DELL posted a sizable 50% beat relative to the Zacks Consensus EPS Estimate and reported sales 10% ahead of expectations.
NetEase, a current Zacks Rank #1 (Strong Buy), is a Chinese internet technology company engaged in developing applications, services, and other technologies. NTES shares presently yield 1.8% annually, more than double the Zacks Computer & Technology sector average of 0.7%. Dividend growth is also more than apparent, with NTES boasting a 27% five-year annualized dividend growth rate. And the company’s growth expectations can’t be overlooked, with consensus estimates calling for 40% earnings growth in its current year (FY23) on 2% higher sales. NetEase is scheduled to reveal quarterly results just in a few days on Thursday, November 16th.
Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices. The stock is currently a Zacks Rank #2 (Buy). AVGO shares presently yield 1.9% annually paired with a payout ratio sitting at 48% of the company’s earnings. And Broadcom generates ample cash, with free cash flow of $4.6 billion throughout its latest quarter improving 7% from the year-ago period. The stock has been a long-term outperformer, with shares up more than 2600% over the last decade compared to the S&P 500’s 211% gain. The annualized return works out to be a remarkable 40%.
Dividend-paying stocks don’t always have to be ‘boring,’ as many exciting companies from the technology sector also reward their shareholders with payouts. And for those interested in gaining exposure to the sector paired with quarterly payouts, all three stocks above – Dell Technologies DELL, NetEase NTES, and Broadcom AVGO – fit the criteria nicely. On top of quarterly payouts, all three currently sport a favorable Zacks Rank, reflecting positive outlooks among analysts.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.