3 tech stocks with modest dividend yields to bet on

bamagz

6 months ago

Technology stocks have been among the worst performers in 2022 so far. The Zacks IT & Technology sector is down 29% YTD, while the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 indices are down 12.6%, down 24 .2% and 17.2%, respectively.

The sector suffers from inflationary pressures, higher wages and currency fluctuations. Supply chain disruptions due to acute shortages of chips and various other components are affecting the profitability of companies in the space. Additionally, the ongoing war between Russia and Ukraine has raised investor concerns about the near-term prospects of tech companies.

Companies are postponing their big IT spending plans due to the weakening global economy amid ongoing macroeconomic and geopolitical issues. In July 2022, Gartner lowered its forecast for the growth rate of IT spending globally to 3% from 4% mentioned above. The research firm’s report highlights that IT spending growth in 2022 will be much slower than in 2021 due to spending cuts in the areas of devices, software, IT services and communication services.

The aforementioned challenges are likely to persist in the near term, negatively impacting the overall financial performance of most technology stocks. But does that mean investors interested in tech stocks should steer clear of investing in the space?

We believe that amid the ongoing macroeconomic headwinds and highly volatile market environment, investing in high-quality, dividend-paying technology stocks such as:Texas Instruments Incorporated txn, ASE Technology Holding Co., Ltd. asx and Vishay Intertechnology, Inc. VSH: could get good returns.

A stock with a history of increasing dividends is considered healthy and offers an opportunity for capital appreciation regardless of stock market movements. Dividend growth stocks generally act as a hedge against economic uncertainty and offer downside protection with a steady increase in payouts.

Choosing the Right Dividend Stocks

We have run the Zacks Stocks Screener to identify stocks that have a dividend yield greater than 2% with five-year historical dividend growth greater than 0.1%. In addition, we have narrowed our search by considering stocks with a Zacks #2 rank (buy) and a dividend payout ratio of less than 60%. You can see Full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Let us analyze the above mentioned tech stocks in detail:

Texas Instruments is an original equipment manufacturer of analog, mixed-signal, and digital signal processing (DSP) integrated circuits. The company is benefiting from a strong rebound in the auto market.

The strong demand environment in the industrial, communication equipment and enterprise systems markets is very positive. Additionally, strong momentum in the analog segment, due to strong signal chain and power product lines, is positively contributing to the top line. Also, the robust onboard processing segment is performing well.

The stock has a dividend yield of 2.77% and a five-year historical dividend growth of 17.38%. Also, the TXN payout rate is 50% of earnings today. View Texas Instruments’ dividend history here.

Texas Instruments Incorporated (TTM) Dividend Yield

Texas Instruments Incorporated dividend-yield-ttm | Texas Instruments Incorporated Stock Price

ASE technology is a provider of assembly and test semiconductor manufacturing services. The company develops and offers complete turnkey solutions covering front-end engineering testing, wafer probing and final testing, as well as integrated circuit packaging, materials and electronics manufacturing services.

ASE Technology has benefited from the increasing demand for multi-die and multi-packaging platforms. It recently introduced an advanced packaging platform VIPak to enable vertically integrated packaging solutions. The release of VIPak is welcome as it represents ASE’s next-generation 3D heterogeneous integration architecture that extends design rules and achieves ultra-high density and performance.

Strong demand for traditional electronics manufacturing services and System-in-Package services are positively contributing to top-line growth. Also worth noting is ASX’s ability to serve reliable, high-volume trading needs.

The company has a dividend yield of 6.31% and a five-year annualized dividend growth of 10.52%. Its dividend payout ratio is 29% of earnings. See ASE Technology’s dividend history here.

ASE Technology Holding Co., Ltd. Dividend Yield (TTM)

ASE Technology Holding Co., Ltd. dividend-yield-ttm | Listing of ASE Technology Holding Co., Ltd.

Vishay Intertechnology is a global manufacturer and supplier of semiconductors and passive components. The company’s products include metal-oxide-semiconductor field-effect transistors (MOSFETs), diodes, and optoelectronic components.

Vishay Intertechnology is constantly benefiting from its strong product lines of resistor, diode, capacitor, inductor and optoelectronics. Additionally, a recovery in the auto sector and strong momentum in the industrial, telecom and power supply markets are driving the top line.

Furthermore, the strong magnetism of Vishay Intertechnology is continuously driving the specialized business. Furthermore, the growing momentum in the areas of power transmission and electric cars with the help of robust capacitors is a tailwind. Additionally, VSH’s strong focus on expanding its manufacturing capabilities continues to be an important factor.

VSH has a dividend yield of 2.1% and a five-year annualized dividend growth of 8.12%. Also, the company’s payout ratio is 14% of earnings today. See Vishay Intertechnology’s dividend history here.

Dividend Yield (TTM) of Vishay Intertechnology, Inc.

Vishay Intertechnology, Inc. dividend-yield-ttm | Listing of Vishay Intertechnology, Inc.

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