3 Tech Stocks That Pay Dividends

The phrase “tech stocks that pay dividends” almost seems like an oxymoron. After all, aren’t most high-growth tech companies burning through cash on their way to profitability? That’s a common misconception. There are plenty of tech stocks that pay dividends while still growing revenue at a brisk pace.

For example, in 2021, 44 of the 76 companies that comprise the Technology Select Sector Index paid a dividend. As for the S&P 500, there are 197 tech stocks in the index. Of those, 78 pay a dividend. 

So, that gives me plenty of options to choose from in my quest to find the best tech stocks that pay dividends. The trick is selecting three that are still growing. To make the cut, I only selected tech stocks with expected double-digit revenue growth that also have dividend yields of 1% or higher.   

Benchmark Electronics (BHE)

Benchmark Electronics (NYSE:BHE) provides manufacturing services to companies in eight countries from 23 manufacturing locations. It’s been in business since 1979 and is a Fortune 1000 company. In 2021, the company’s revenue grew 10% to $2.26 billion. Analysts are calling for 27% growth this year to $2.86 billion. 

Benchmark reported its second-quarter results earlier this month. Revenue increased 34% year over year with strong growth in its computing (73% YOY), industrials (59% YOY), medical (53% YOY) and semiconductor capital (26% YOY) business segments.

Non-GAAP operating margin in the quarter was 3.1%, up from 2% a year ago. And the company earned 50 cents a share on a non-GAAP basis, up 85% year over year.  

“The second quarter continued to demonstrate our ability to execute on our growth strategy despite ongoing supply chain challenges,” said President and CEO Jeff Benck. “We were pleased with the balanced revenue contribution to our performance in the second quarter, led by the Medical, Industrials, and Computing sectors. Meanwhile, our Semi-Cap sector continues to demonstrate nice growth, with demand signals pointing to strength into 2023.”

BHE stock is up around 13% over the past year and has a healthy 2.3% dividend yield.

Analog Devices (ADI)

Analog Devices (NASDAQ:ADI) is easily the best-known name on this list with the largest market cap at $88.4 billion. The company is one of the world’s largest analog and digital signal processing chipmakers. 

Analog Devices was started in 1965 when MIT graduates Ray Stata and Matthew Lorber began manufacturing high-performance operational amplifiers. It was immediately profitable. 

The company took a big step forward when it acquird rival Maxim Integrated Products for $21 billion in stock in a deal completed last year. Maxim designs analog chips for several growth markets, including automotive and data centers. 

Analog reported record revenue when it released its third-quarter results this week. Sales of $3.1 billion were 77% higher than a year earlier. Adjusted earnings per share of $2.52 were up 46.5% year over year.

Of the 27 analysts covering ADI stock, 16 rate it a “buy,” five have it listed as “overweight,” and six rate it a “hold.” No analysts rate it “underweight” or an outright “sell.”

The average target price is just below $194 per share, representing 14% upside from current levels. And, of course, there’s the stock’s attractive dividend yield of 1.7%.

Adtran (ADTN)

Adtran (NASDAQ:ADTN) is a provider of networking and communications equipment for voice, data, video and internet communications for businesses and individuals. 

The company got its start in 1986 by providing network equipment to the seven Regional Bell Operating Companies (RBOC) divested by AT&T (NYSE:T) as part of its antitrust settlement agreement with the federal government. Today, it’s a business with annualized revenue of more than $618 million. 

On July 15, Adtran announced the completion of its all-stock merger with ADVA Optical Networking, a European provider of network equipment for data, storage, voice and video services. Together, the two businesses are expected to generate more than $1 billion in annual revenue in 2022, up 81% from last year. Adtran shareholders own 54% of the combined company, with ADVA shareholders owning the rest.    

Adtran reported strong second-quarter results earlier this month. Revenue was up 20% year over year to $172 million. Meanwhile, operating income was $8.13 million, 107% higher than a year earlier. As ADVA’s revenues come online, the quarterly reports will get even better.

ADTN stock is up 42% since the end of June and trading near its 52-week high. Shares’ 1.5% yield can hold investors over while they wait for a breakout.  

On the date of publication, Will Ashworth 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.