7 Top Tech Dividend Stocks Worth Taking a Chance On
Dividend stocks are very appealing to investors, for good reason. Growth stocks tend to make the headlines — with the 2020 pandemic, shareholders in key areas like vaccine development and working from home technology saw triple-digit gains. In contrast, dividend stocks don’t have the same degree of frenzy.
Owning shares in companies that offer regular dividend payments may not have the same thrill, but it’s a great way to generate profit. You can then use those earnings to invest in high growth stocks.
Here 7 top tech dividend stocks worth taking a chance on:
- Cisco Systems (NASDAQ:CSCO)
- CSPi (NASDAQ:CSPI)
- International Business Machines (NYSE:IBM)
- Juniper Networks (NYSE:JNPR)
- NVE (NASDAQ:NVEC)
- Paychex (NASDAQ:PAYX)
- Sabre (NASDAQ:SABR)
I’m focused on dividend performance here, so the catch is that some choices that might receive a low overall rating in Portfolio Grader. However, each has real appeal as a dividend generator. If you’re more interested in investment with the lowest risk possible, I recently published a list of the safest stocks for 2021 you may want to check out instead.
Cisco Systems (CSCO)
Cisco Systems had a rough year in 2020. The company’s Webex remote collaboration software has a long history of enterprise adoption, so you’d think it would have surged in popularity when the pandemic forced many to work from home.
However, Webex was eclipsed by easier to use video conferencing solutions. At the same time, Cisco saw orders for its enterprise network products fall.
The company’s entire year can probably be summed up by the events of August 12. The company announced nearly $1 billion in cost cutting measures after reporting a 9% sales decline in the previous quarter. That news triggered an 11% drop in CSCO stock — its largest single day decline in nearly a decade.
After five years of solid growth, CSCO stock lost 4% of its value in 2020. What didn’t waver was the company’s dividend payment. In December, Cisco announced a 36 cents per share quarterly dividend. That brings the company’s annual dividend to $1.44 for a 3.3% yield and it has been paying out at an increasing yearly rate since 2011.
CSPi is focused on enterprise networking and security. And one of its biggest customers happens to be the cruise line business. As you might expect, any additional sales on the security front were wiped out by the hit its other businesses took as companies slowed their network spending. And we all know what happened to cruise lines in 2020.
In the fourth quarter of 2020, the impact of the pandemic was still being felt, with CSPi reporting revenue of $14.3 million, down 36% year-over-year. That being said there was some good news. The company reported improved margins for the quarter, momentum in its managed services and a “robust cash balance” to end the year, along with anticipation that its cruise line business would ramp back up in 2021.
CSPi stock had been in recovery mode since the 2008 recession but 2020 derailed that narrative, as shares lost over 40% of their value. However, dividend investors love CSPi. Until 2020, the company had been paying dividends for eight years. The most recent was at the end of February 2020, offering a very attractive 7.76% dividend yield.
The company suspended its dividend payment last April, but based on past history it’s likely to resume this year as business returns to normal.
IBM is considered a tech industry dinosaur by many investors. The company has had to reinvent itself numerous times throughout its 110 year history. Most recently, that’s meant a shift to being an enterprise cloud technology provider.
IBM stock has been on a downward trajectory since 2013. After a promising start last year (IBM spiked through January), the events of 2020 inevitably resulted in further losses in share value. You definitely don’t want to look at Big Blue as a growth stock. In fact, it rates a “D” in Portfolio Grader.
However, an investment in IBM pays dividends. The latest, in November, was $1.63 per share. That represents an impressive yield of 5.17%, but just as importantly, those quarterly dividends are something investors can count on. November’s payment was dividend number 423 for IBM.
Juniper Networks (JNPR)
Networking technology provider Juniper Networks saw its stock take a hit through 2020. Companies were sending employees home to work and dealing with tightened budgets, so cutting their IT spending was no big surprise. Investment analysts have JNPR stock pegged to recover to January 2020 levels over the next 12 months as business slowly returns to normalcy.
We’re not looking at Juniper as a growth stock though, we’re interested in the company’s dividend track record. In 2020 — which was a rough year by any measurement — Juniper’s annual dividend amounted to 80 cents per share. That’s a very healthy 3.55% dividend yield. The company has a history of paying quarterly dividends that goes back to 2014.
If you’re looking for tech dividend stocks to add to your portfolio, JNPR stock is definitely worth considering.
NVE Corporation (NVEC)
Minnesota-based NVE Corporation runs a very specialized business. The company describes itself as a global leader in “the practical commercialization of spintronics.” What are spintronics? This is nanotechnology that uses electron spin instead of electron charge to store and transmit data. Primarily used in sensors and couplers, it’s pretty high-tech stuff.
Chances are you’re not familiar with spintronics, but the company name might ring a bell. NVE stock went on a run in the first half of 2018, going from $72 to $131. That was an 82% gain in just over five months.
It’s since given those gains back and then some, but what hasn’t changed is the $1 per quarter cash dividend the company has been paying since 2015. That currently represents a generous 7.12% dividend yield for investors.
Is that dividend in jeopardy because of the pandemic? When reporting NVE’s latest quarterly earnings, the company’s CEO downplayed the effect:
“We are pleased to report a solid profit for the quarter despite a significant impact from COVID-19 pandemic on our revenue.”
I like Paychex because it’s one of those rare picks that can be counted as both dividend stock and growth stock.
Over the past five years, PAYX stock has increased in value by 89%. That’s not spectacular growth, but it’s consistent and sustainable.
Paychex provides payroll, benefits and HR outsourcing services for small and medium-sized businesses. That’s a market segment that has been growing and will continue to grow. We tend to focus on big companies like IBM that have thousands of staff, but the reality is that among firms with employees in the U.S., 98.2% of those companies have 100 or fewer workers. Companies of this size can seldom support a full-fledged HR department — thus the demand for Paychex’ services.
At the same time, Paychex has been regularly paying a quarterly dividend for decades. The most recent was for $2.48, offering investors a 2.66% dividend yield. As both a Portfolio Grader “C” rated stock and a dividend stock, PAYX stock is a nice addition to any portfolio.
Sabre is a well-known travel technology company. Its focus is on booking air travel. Naturally, that resulted in a disastrous 2020 for SABR stock, which lost 47% of its value.
Sabre was known for paying out generous dividends (its last dividend yield was 4.66%), but that came to an end last spring. With the airline industry grounded, Sabre had no choice but to suspend its dividend.
The situation with Sabre combines risk with opportunity for those who are willing to take a chance.
As the airline industry begins to bounce back, so will Sabre’s business. It’s not going to happen immediately, but with vaccines rolling out, eventually people will return to flying.
An investment now — near all-time lows — forgoes the immediate dividend, but offers the potential for gains as SABR stock continues to recover. And once Sabre is back on solid financial ground once again, odds are good it will resume being a member of the dividend stocks club. That’s a win-win.
On the date of publication, Louis Navellier had a long position in CSCO, IBM and PAYX. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.