Because the stock market is expected to remain in a correction mode, or at least volatile, in the near term due to investors’ concerns about the spread of the COVID-19 Delta variant and high inflation, investing in dividend-paying stocks could help investors ensure a steady income stream. However, not every dividend-paying stock is necessarily a good bet now.
Because the prospects of the technology industry look promising thanks to the continuing global, digital transformation across industries and rising demand for advanced technologies, the chances that mega players in the industry will stay afloat amid the market volatility are very high. So, it could be wise to invest now on the price dips in dividend-paying mega tech stocks Microsoft Corporation (MSFT), Cisco Systems, Inc. (CSCO), Intel Corporation (INTC), and Broadcom Inc. (AVGO).
Their consistent product innovations, combined with expanded market reach, better financials, and attractive dividend yields should enable them to dodge market volatility and deliver significant returns in the coming months.
Microsoft Corporation (MSFT)
MSFT develops, supports, licenses, and sells various software products, services and solutions worldwide. The company also manufactures and sells PCs, tablets, gaming and entertainment consoles, other intelligent devices, and related accessories through OEMs, distributors, resellers, digital marketplaces, and retail stores.
MSFT is scheduled to pay a $0.56 quarterly dividend on September 9, 2021. The stock pays a $2.24 dividend per share annually, which translates to an 0.81% yield. The company’s dividend has grown at a 9.5% rate over the past five years.
On July 13, 2021, MSFT and NEC Corporation (NEC), a Japanese information technology and electronics corporation, expanded their collaboration to leverage MSFT’s Microsoft Azure and Microsoft 365, and NEC’s network and IT expertise to help enterprise customers and the public sector further accelerate their cloud adoption and digital transformation initiatives. Combining AI and IoT technologies and the expertise of both companies should enable them to provide greater speed and lower-latency data connections and provide high-performance network experiences to their customers.
On June 30, AT&T Inc. (T) collaborated with MSFT to manage T’s mobile network traffic using MSFT’s Microsoft Azure technology. This should enable T to enhance productivity and deliver large-scale network services to meet customers’ needs. Also, MSFT will have access to T’s intellectual property to expand its Azure for Operators telecom offering and acquire T’s carrier-grade Network Cloud platform. MSFT’s adjusted revenue came in at $41.71 billion for its fiscal third quarter, which ended March 31, 2021, representing a 19.1% year-over-year rise. The company’s gross profit increased 19.2% year-over-year to $28.66 billion. Its adjusted operating income is reported at $17.05 billion, up 31.4% from the prior-year period. While its adjusted net income increased 38% year-over-year to $14.84 billion, its adjusted EPS increased 39.3% year-over-year to $1.95. As of March 31, 2021, the company had $13.70 billion in cash and cash equivalents.
A $1.95 consensus EPS estimate for the current quarter, ending September 30, 2021, represents a 6.9% improvement year-over-year. MSFT surpassed consensus EPS estimates in each of the trailing four quarters. The $42.37 billion consensus revenue estimate for the current quarter represents a 14.1% gain from the prior-year period. Analysts expect the stock’s EPS to grow at 17.2% per annum over the next five years. The stock has gained 28% over the past six months and closed yesterday's trading session at $277.01.
MSFT's POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Sentiment, and a B grade for Stability and Quality. Click here to see the additional ratings for MSFT (Growth, Value, and Momentum).
MSFT is ranked #16 of 132 stocks in the Software - Application industry.
Click here to check out our Software Industry Report for 2021
Cisco Systems, Inc. (CSCO)
CSCO designs, manufactures, and sells Internet Protocol (IP) based networking products and services related to communications and information technology worldwide. The company sells its products and services directly and through systems integrators, service providers, resellers, and distributors.
CSCO is scheduled to pay a $0.37 quarterly dividend on July 28, 2021. The stock distributes a $1.48 per share dividend annually, which translates to a 2.79% yield. The company’s dividend has grown at a 9.2% rate over the past five years.
On July 15, 2021, Bharti Airtel, India's premier communications solutions provider, announced the launch of advanced connectivity solutions for enterprises based on CSCO’s Cisco Software Defined Wide Area Networking (SD-WAN) technology to accelerate their digital transformation and allow them to deliver applications to users with greater visibility, security, and performance. On July 8, CSCO completed the acquisition of Socio Labs, Inc., a modern event technology platform that manages the full lifecycle of multi-session, multi-track virtual, in-person, and hybrid conferences. Adding Socio Labs to CSCO’s Webex portfolio enables it to provide event organizers a single platform with everything they need to host events successfully.
During its fiscal third quarter, ended May 1, 2021, CSCO’s total revenue increased 6.8% year-over-year to $12.80 billion. Its non-GAAP gross profit was $8.45 billion, up 5.7% from the prior-year period. Its non-GAAP income from operations is reported to be $4.30 billion for the quarter, representing a 2.8% improvement year-over-year. While its non-GAAP net income increased 4.2% year-over-year to $3.51 billion, its EPS increased 5.1% year-over-year to $0.83. The company had $7.36 billion in cash, cash equivalents, and restricted cash as of May 1, 2021.
Analysts expect CSCO’s EPS to improve 3.4% year-over-year to $0.83 for the current quarter, ending July 31, 2021.It surpassed The Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $13.04 billion for the current quarter, representing a 7.3% rise from the prior-year period. The stock’s EPS is expected to grow at a 5.9% rate per annum over the next five years. CSCO has gained 17.4% over the past six months and ended yesterday’s trading session at $53.06.
CSCO’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to Buy in our proprietary ratings system.
The stock has an A grade for Quality, and a B grade for Sentiment and Stability. Click here to see the additional ratings for CSCO (Growth, Value, and Momentum).
CSCO is ranked #6 of 55 stocks in the B-rated Technology - Communication/Networking industry.
Intel Corporation (INTC)
INTC designs, manufactures, and sells computer products and technologies that deliver networking, data storage, and communication platforms. The company also provides Internet of Things products, computer vision and machine learning-based sensing, data analysis, localization, mapping, and driving policy technology.
INTC’s $1.39 per share annual dividend translates to a 2.54% yield. The company’s dividend has grown at a 6.3% rate of 6.3% over the past five years.
Renowned for deep co-engineering and collaboration to advance computing, INTC and MSFT deepened their partnership on June 24, 2021, to deliver a new computing experience with the forthcoming Windows 11. With Intel Bridge Technology, new Windows PCs enabled by Intel Core processors and its broad portfolio of intellectual property and platform technologies will offer the most choices and best experiences for the broadest ecosystem of applications.
On June 21, INTC collaborated with Cellwize Wireless Technologies, an automation and orchestration company, to boost 5G virtual radio access network (vRAN) deployments by adding Cellwise’s CHIME network optimization platform to INTC’s Xeon Scalable processors and FlexRAN reference software. As cellular networks progress from RAN to vRAN, this collaboration should allow operators to deploy vRAN more quickly, with a fully automated process, thus providing a 90% reduction in associated costs, improved quality of services through automation, and overall enhanced customer satisfaction through AI-driven and predictive decision making.
For its fiscal first quarter ended March 27, 2021, INTC’s non-GAAP operating margin was 32.8%, representing a 130-basis-point rise sequentially. While the company’s revenue from its IoT segment increased 13.5% year-over-year to $1.29 billion, the revenue from its Client Computing Group increased 8.5% year-over-year to $10.61 billion. As of March 27, 2021, the company had $5.19 billion in cash and cash equivalents.
INTC achieved the Street’s EPS estimates in each of the trailing four quarters. Its EPS is expected to grow at a 5.4% rate per annum over the next five years. INTC has gained 9.7% year-to-date and closed yesterday’s trading session at $54.64.
INTC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Value, and a B grade for Quality. We also have graded INTC for Growth, Sentiment, Stability, and Momentum. Click here to access all INTC's ratings.
INTC is ranked #13 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2021
Broadcom Inc. (AVGO)
AVGO designs, develops, and supplies a broad range of analog and digital semiconductor connectivity solutions, including wired infrastructure, wireless communications, enterprise storage, etc. The company’s products are used in data center networking, home connectivity, broadband access, telecommunications equipment, smartphones, and base stations.
AVGO paid a $3.60 quarterly dividend on June 22, 2021. The stock distributes $14.40 per share annually, which translates to a 3.1% yield. The company’s dividend has grown at a 50% rate of 50% over the past five years.
On June 15, 2021, AVGO announced new, industry-first capabilities for Value Stream Management (VSM) in its ValueOps software portfolio that seamlessly combine business and investment-oriented product management, providing advanced operationally focused Agile planning and management capabilities. This integration of AVGO’s Clarity and Rally software products enables every role within an enterprise to manage, track and analyze unified value streams with a consistent value orientation and methodology. As a recipient of the Leader award in the 2021 Enterprise Agile Planning Tools, AVGO hopes this helps ValueOps to gain expanded market reach in the coming months.
On May 11, AVGO introduced the world’s first 64G Fibre Channel Host Bus Adapter (HBA), named Emulex Gen 7 LPe36000-series HBAs. Reducing database warehousing query time by half, AVGO’s end-to-end 64G SAN technology enabling storage innovation is expected to drive the industry for the next decade.
AVGO’s non-GAAP net revenue for its fiscal second quarter, ended May 2, 2021, was $6.61 billion, which represents a 15.1% year-over-year improvement. The company’s non-GAAP gross profit increased 18% year-over-year to $4.95 billion. AVGO’s non-GAAP operating income was $3.80 billion for the quarter, up 25.4% from the prior-year period. While its non-GAAP net income increased 28.3% year-over-year to $2.98 billion, its non-GAAP EPS increased 28.8% year-over-year to $6.62. As of May 2, 2021, the company had $9.52 billion in cash and cash equivalents.
Analysts expect AVGO’s EPS to improve 28% year-over-year to $6.91 for the current quarter, ending July 31, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock’s $6.76 billion consensus revenue estimate for the current quarter represents a 16.1% rise on a year-over-year basis. Analysts expect the stock’s EPS to grow at an 8.5% rate per annum over the next five years. AVGO has gained 48.1% over the past year and 28.5% over the past nine months. It closed yesterday’s trading session at $464.45.
It’s no surprise that AVGO has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
AVGO has a B grade for Growth, Stability, Quality, and Sentiment. In addition to the POWR Ratings grades we’ve just highlighted, one can see AVGO’s ratings for Momentum and Value here.
AVGO is ranked #4 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.
Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in AVGO for a 25% gain. Learn more about the RTR service here.
Click here to checkout our Semiconductor Industry Report for 2021
MSFT shares were trading at $280.45 per share on Tuesday afternoon, up $3.44 (+1.24%). Year-to-date, MSFT has gained 26.67%, versus a 16.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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