Tags: aon | comcast | texas instruments | divdend | stock

3 Top Tech Stocks for Dividends

3 Top Tech Stocks for Dividends
Texas Instruments Dallas headquarters (Kristoffer Tripplaar/AP)

Bob Ciura By Friday, 21 June 2024 02:47 PM EDT Current | Bio | Archive

For many years, tech stocks as a group mostly did not pay dividends to shareholders. Technology companies needed to retain every dollar to reinvest in growth.

However, this has changed in the past decade. As a result, the NASDAQ 100 list now contains many quality dividend stocks that have excellent dividend growth potential for the long-term.

This article will highlight 3 dividend-paying stocks from the tech sector.

Aon plc (AON)

Aon is a professional services firm headquartered in London, United Kingdom. The company provides a variety of services including consulting, risk management, and health plan management. Aon has approximately 500 offices worldwide that serve 120 countries through a workforce that numbers about 50,000.

Aon posted first quarter earnings on April 26th, 2024. Adjusted earnings-per-share came to $5.66, which missed estimates by 26 cents. Revenue was up more than 5% year-over-year to $4.07 billion, but was $70 million light of expectations.

Organic revenue was up 5% year-over-year, fiduciary investment income was up 1%, and forex added 1%. Acquisitions, divestitures, and other items reduced the top line by 2%.

Between 2011 and 2020, Aon compounded its adjusted earnings-per-share at a rate of nearly 15% per year. Looking ahead, we believe that the company’s growth is likely to continue to be quite strong, albeit a bit slower than its historical pace. More specifically, we are forecasting 11% annualized earnings growth over a full economic cycle.

Management continues to be bullish, and rightfully so, as Aon’s businesses are posting very strong rates of growth, for the most part. We see expense savings as a driver of earnings growth along with the buyback, and organic revenue growth should continue to move the top line higher as well.

AON has increased its dividend for 13 consecutive years while the stock currently yields 0.9%.

Comcast Corp. (CMCSA)

Comcast is a media, entertainment and communications company. As of Q1 2023, Comcast began reporting in 2 key business segments: Connectivity & Platforms (Residential Connectivity & Platforms and Business Services Connectivity), and Content & Experiences (Media, Studios, Theme Parks).

Comcast reported its Q1 2024 results on 04/25/24. Analysts noted that the company lost 65,000 customers. Comcast introduced a new prepaid brand that it anticipates will attract wireless broadband customers without eating into its core customer base. Interestingly, it still witnessed top-line growth thanks to rate increases. For the quarter, the company’s revenues climbed 1.2% to $30.1 billion.

Adjusted earnings-per-share climbed 13.9% to $1.04. And it generated free cash flow (FCF) of $4.5 billion. During Q1 2024, Comcast repurchased $2.4 billion worth of common stock at ~$42.86 per share.

Share repurchases are a meaningful driver of the company’s EPS growth. In 2023, Comcast bought back $11 billion worth of shares at ~$41.92 per share. The company started a new $15 billion share repurchase program which will help boost future earnings-per-share.

The cable industry is impacted by the nationwide cord-cutting trend, as some customers are ditching traditional pay-TV. So far, Comcast has been able to withstand this trend through growth from its other businesses. Its balance sheet remains solid with a consolidated net leverage ratio of 2.3x at the end of 2023.

Comcast has had 16 consecutive dividend increases. This fast dividend growth was made possible through solid earnings growth and with a safe dividend payout ratio. Its dividend is well-covered by earnings and cash flows. Comcast is one of the largest players in the entertainment industry. CMCSA stock currently yields 3.2%.

Texas Instruments (TXN)

Texas Instruments is a semiconductor company that operates two business units: Analog and Embedded Processing. Its products include semiconductors that measure sound, temperature and other physical data and convert them to digital signals, as well as semiconductors that are designed to handle specific tasks and applications.

Texas Instruments reported its first quarter earnings results on April 23. During the quarter Texas Instruments generated revenues of $3.66 billion, which represents a decline of 16% versus the previous year’s quarter. This beat analyst estimates by $50 million, as the analyst community had forecasted an even bigger revenue decline.

Texas Instruments managed to keep its gross profit margin at a very solid level of 57%, but due to operating leverage working against the company, its operating profit margin declined to 35%.

Texas Instruments’ dividend payout ratio has risen over the last decade, but the dividend still looks relatively safe, as Texas Instruments generates vast free cash flows, of which it pays out roughly half in dividends. The company has increased its dividend for 20 consecutive years. TXN shares currently yield 2.6%.

Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.

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For many years, tech stocks as a group mostly did not pay dividends to shareholders. Technology companies needed to retain every dollar to reinvest in growth. However, this has changed in the past decade.
aon, comcast, texas instruments, divdend, stock
Friday, 21 June 2024 02:47 PM
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