Tech companies aren’t known for paying dividends. Many prefer to hold onto cash to finance expansion or use it to buy back shares.
However, some technology stocks stand out for their ability to pay dividends. Three that have quietly delivered monstrous dividend growth over the years are broadcom (AVGO 0.47%), to sense (INTU 0.21%)Y Skyworks Solutions (SWKS -0.32%). Here’s why dividend investors won’t want to overlook these tech-driven payouts.
A great technological dividend
Broadcom pays one of the most attractive dividends in the technology sector. The semiconductor maker and infrastructure software solutions company aims to pay half of its cash flow from the previous year to investors through dividends. For its fiscal year 2022, the company set a dividend payment of $4.10 per quarter, 14% higher than the previous level. Broadcom offers an attractive dividend yield 3.3% at the current share price, more than double that of a S&P 500 index fund
Broadcom has a long history of growing its dividends. The company declared its first dividend in 2010 at $0.07 per share. Since then it has increased the payout by a staggering 5,575%!
The company should be able to continue to increase your payment in the future. He uses the other half of his free cash flow to buy back shares and invest in expanding his operations. Broadcom is in the process of acquiring VMWare (VMW -1.08%) for $61 billion in cash and stock. That transaction will accelerate your software’s scale and growth opportunities, which should provide you with more free cash flow to pay dividends in the future.
Bold growth ahead
to sense it might not appeal to dividend investors at first glance, given its below-average 0.8% yield. However, the fintech platform has significantly expanded its payout over the years.
The company recently increased its payout by 15%, increasing the payout to $0.78 per share each quarter. That continues Intuit’s history of steadily increasing its dividend. Since starting a dividend in late 2011, Intuit has increased the payout by 410%.
Intuit should be able to keep increasing its dividend going forward. The company has made significant investments to expand its platform, including acquiring Credit Karma and Mailchimp over the past year. The company set bold goals to more than double its number of customers by 2025 while accelerating revenue growth. That should give you more cash flow to quickly grow your dividend.
Connected to some powerful growth trends
Skyworks Solutions offers quite an attractive dividend, given its 2.5% yield. The semiconductor company has done an excellent job of increasing that payment over the years.
The company initiated a quarterly dividend in early 2011 at $0.11 per share each quarter. Skyworks has steadily increased its quarterly payout, most recently giving investors an 11% raise in August, its eighth straight year of dividend growth. That pushed the payout to $0.62 per share each quarter, up 463.6% since the company started its dividend.
Even with that rapidly rising dividend, Skyworks has invested heavily in next-generation technologies to fuel growth. That positions it to capitalize on the growth it sees in its core markets. For example, global wireless data traffic is on track to expand at a 27% annual rate over the next five years, while by 2030 there should be 650 million connected cars on the road, consuming 25 times more data than that of current smartphones. These catalysts should allow the company to continue growing revenue and earnings at a rapid rate, which could allow it to rapidly increase its dividend.
Tech-Driven Dividend Growth
Tech stocks aren’t often on the radar of dividend investors because many allocate their cash elsewhere. That could cause them to overlook some big dividend growth stocks in the sector, including Broadcom, Intuit and Skyworks Solutions. All three companies should be able to continue to increase their payouts at attractive rates, making them ideal options for investors looking for a fast-growing stream of passive income.
Matthew DiLallo He has positions at Intuit, Skyworks Solutions, and VMware. The Motley Fool has positions and recommends Intuit. The Motley Fool recommends Broadcom, Skyworks Solutions, and VMware. The Motley Fool has a disclosure policy.