Microsoft, Apple and NVIDIA are in a fierce battle to become the world's largest company by market capitalization. Apple briefly surpassed Microsoft after announcing AI at the Worldwide Developers Conference (WWDC24), but profit-taking caused the company to fall back to second place.
Meanwhile, Nvidia, a newcomer to the trillion-dollar club, is quietly catching up to the two established tech giants, fueled by massive demand for its AI-optimized data center products and services.
Five of the world's most valuable companies are in the technology sector, including Google and Amazon, and investors are flocking to tech companies, pushing their stock prices to new highs. However, the sector's large price fluctuations and sudden reversals may make it not the best choice for risk-averse income investors.
So how can you participate in the rapid growth of the tech industry while maintaining a safe, defensive portfolio? Simple: invest in high-yielding tech stocks. So let’s take a look at the top three highest-yielding tech stocks we recommend buying on the market.
Why did I choose these companies?
To get the list below, I used Barchart's Stock Screener feature, which I use for almost all of my stock selection and market analysis because it's user-friendly, intuitive, and so easy to use.
We screened for the top 3 highest yielding tech stocks we recommend buying by visiting our screener page and adding the following filters:
Market Segment
- Computers and technology. This filter allows you to screen for all technology companies listed on the NASDAQ, AMEX, NYSE, OTC-US, and non-common stock lists.
- Annual dividend yield
- Blank. I usually leave the Yield field blank so that it appears on the search results page, then click on that column heading to Order the results from high to low or low to high.
- Current analyst ratings
- 3.5 to 5. A rating between 3.5 and 4.4 is rated a Moderate Buy, while 4.5 and above is a Strong Buy.
- Number of analysts
- Over 8. I believe the more analysts cover a stock, the more valid the valuation becomes.
Using these criteria, Barchart Screener returned 226 results. With the click of a mouse button, you can sort the list from highest to lowest yield. We'll then take the top three and discuss each one in turn, starting from number three.
HP Inc. (HPQ)
Anyone who has been in the technology industry or used computers regularly since the 2000s can almost guarantee that they have used an HP product. The company manufactures computer parts and accessories, including peripherals, access devices, and printers. It also provides technology solutions for security, sales, small business, government, and schools.
HP ended 2023 on a somewhat weaker note, with revenue down 14.6% year over year. However, diluted EPS rose 9%, beating expectations. President and CEO Enrique Lores said, “We delivered strong performance in a challenging market, innovated in key growth areas and ended the year on a strong note.”
The company pays a quarterly dividend of $0.2756 per share, which equates to an annualized forward yield of $1.1024, or 3.02%. HPQ stock is rated a Moderate Buy by 13 analysts with a score of 3.69.
Open Text Corporation (OTEX)
OpenText is a networking and technology company that provides products and services for various industries including banking, insurance, healthcare, energy, industrial manufacturing, utilities, etc. Most of OpenText's platform with AI-driven solutions and analytics capabilities is delivered through cloud services.
OTEX stock has a rating of 3.80 from 10 analysts, making it the highest on this list, and it's easy to see why: total revenues for fiscal year 2023 grew 28.4% year-over-year. Annual recurring revenue and cloud revenue also posted double-digit growth rates of 26.2% and 10.8%, respectively.
The company pays a $1.00 dividend per year, giving it a yield of 3.50%. However, based on its historical dividend schedule, OpenText is planning to increase its dividend in its next announcement, which could lead to a higher yield.
Cisco Systems, Inc. (CSCO)
Cisco is one of the world's leading networking companies, providing products and services to commercial, business, and retail customers around the world. The company covers many areas of the technology industry, including the Internet of Things, wireless and mobility, cloud computing, and data centers. Perhaps its most notable offering is its industry-recognized certifications in development, cybersecurity operations, networking, and more.
Cisco finished FY23 with revenue up 11% year over year. EPS was $3.07, up 9% year over year. The company is confident this trend will continue, and has set its 2024 revenue and EPS outlook higher than its 2023 results.
In terms of dividends, the company’s expected annual rate is $1.60, giving it a yield of 3.51%. Also, 24 analysts have rated CSCO stock as a Moderate Buy, with an average score of 3.5.
Excluded: Tim SA ADR (TIMB)
TIM SA, or TIM Brazil ADR, would have been the highest-yielding tech stock on the list, but its dividend payments and schedule fluctuate wildly, unlike the three stocks featured here.
Final thoughts
There are no hard and fast rules in the stock market and it's okay to mix things up from time to time, so if you want the safety and income of dividend stocks and want to participate in the huge growth potential of the technology sector, invest in high-yielding tech stocks.
On the date of publication, Rick Orford did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information please see Barchart's disclosure policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
