Investors with a knack for dividends often target the utilities, finance, or consumer staples sectors. Companies within these three sectors often generate stable cash flows and deliver consistent earnings growth, helping vault them to the top of all income investors’ watchlists.
Still, a fair number of technology companies also reward their investors handsomely.
The technology sector is generally not targeted by income investors, as it’s common for companies within the sector to utilize their cash to fuel growth and future opportunities.
However, three exciting large-cap technology companies – NVIDIA NVDA, NetEase NTES, and Roper Technologies ROP – all provide investors with dividend payouts.
In addition, all three sport a favorable Zacks Rank, indicating near-term optimism among analysts. Let’s take a closer look at each.
NVIDIA
NVIDIA gripped the entire market following its latest blowout quarter, with the company posting results well above expectations and providing significant bullish revenue guidance. The stock presently sports the highly-coveted Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
NVDA’s annual dividend presently yields a small 0.04%, lower than the Zacks Computer and Technology sector average. Still, the company’s remarkable growth trajectory helps pick up the slack, with earnings forecasted to soar 130% in FY24 and a further 33% in FY25.
It’s no secret that NVDA shares are pricey, currently trading at a 55.9X forward earnings multiple. Still, investors have had little issue forking up the premium thanks to the company’s remarkable growth profile.
Image Source: Zacks Investment Research
NetEase
NetEase is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. Analysts have taken a bullish stance on the company’s earnings outlook, pushing the stock into a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
NTES shares currently yield 1.9% annually, more than double that of the Zacks Computer and Technology sector average. The company has had little issue increasingly rewarding shareholders, boasting a 32% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
The company posted results well above expectations in its latest release, delivering a 30% EPS beat. Quarterly revenue totaled $3.6 billion, ahead of expectations and slightly lower than the year-ago figure.
Roper Technologies
Roper Technologies, Inc. designs, manufactures, and distributes engineered products and solutions and software. Currently, the stock is a Zacks Rank #2 (Buy).
ROP shares yield 0.6% annually currently, a tick below the Zacks sector average. Still, the company’s 10.6% five-year annualized dividend growth rate helps pick up the slack in a big way.
Image Source: Zacks Investment Research
For those looking for a potential entry point into ROP shares, the 50-day moving average could be considered. As we can see in the chart below, shares have recently bounced nicely off the level in the last two instances.
Image Source: Zacks Investment Research
Bottom Line
While many income-focused investors target sectors such as utilities, finance, or consumer staples, the technology sector shouldn’t be forgotten.
Many technology stocks, including – NVIDIA NVDA, NetEase NTES, and Roper Technologies ROP – all provide a passive income stream.
In addition, all three boast strong growth profiles paired with favorable Zacks Ranks, undoubtedly a strong pairing.
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