3 Tech Stocks for Dividend Investors to Buy Amid Yield Curve & Trade Fears
The Dow dropped 3% Wednesday, in its largest one-day decline so far this year. The downturn marks the continuation of increased market volatility as investors worry about a global economic slowdown, clouded further by the U.S.-China trade war. Fears about a yield curve inversion added a new layer of worries.
Yields on the 10-year U.S. Treasury note briefly dipped below 2-year yields Wednesday. This so-called yield curve inversion happened for the first time since 2007. Some fear the yield curve inversion could signal a recession, as it has in the past. But this sign might have become less reliable due to the Federal Reserve’s quantitative easing, according to many experts.
Nonetheless, the yield on the 10-year U.S. Treasury notes rested at roughly 1.52% in mid-afternoon trading Thursday. Yet with yields so low, investors might look to find returns elsewhere, in a phenomenon known as the Tina effect or “There is no alternative” to stocks.
With this in mind, tech-minded investors might want to focus on stocks that pay a dividend. Finding strong dividend-yielding tech stock might seem difficult, but they are actually relatively abundant. And dividend-focused investors can search for the best tech stocks by using the Zacks Stock Screener.
By limiting our search to companies in our “Computer and Technology” sector with Zacks Rank #2 (Buy) or better rankings, we can ensure that we are finding the highest quality stocks to buy right now. Throw in your preferred dividend yield and you will find some of the best tech stocks for dividend investors to target.
1. Garmin Ltd. GRMN
Garmin has been at the forefront of GPS navigation and wearable tech for years. Many consumers may be familiar with Garmin’s in-car navigation systems and fitness tracking devices but the company also offers an array of products from high-end fish finders to advance radars for aviation and boating, and much more. The Switzerland-headquarter firm posted stronger-than-projected financial results on the last day of July. Second-quarter Aviation unit sales jumped 20%, with Marine and Fitness up 13% and 12%, respectively. Garmin’s overall quarterly revenue climb 7%, held back by an Auto division pullback.
GRMN shares have climbed 19% over the last 12 months to crush the S&P 500’s 1.3% gain and are also up 48% in the past two years against the S&P’s 15%. Looking ahead, our current Zacks Consensus Estimates call for Garmin’s Q3 revenue to climb 6.7%, with fourth-quarter sales expected to pop roughly 9% to $1.02 billion. Meanwhile, the company’s bottom line is projected to jump 4.3% in 2019 and 4.1% higher than our current year estimate in 2020. GRMN is a Zacks Rank #1 (Strong Buy) at the moment that pays an annualized dividend of $2.28 a share, with an impressive 2.98% yield at the moment.
2. CDW Corporation CDW
CDW is a multi-brand technology solutions powerhouse that works with enterprise-level firms, governments, and others across the U.S., Canada, and the UK. The Lincolnshire, Illinois-based company’s portfolio is made up of over 1,000 brands and 100,000 products that range from security offerings to cloud computing solutions. Like Garmin, CDW beat Q2 expectations on both the top and bottom lines on July 31, with revenue up 10.2%. Shares of CDW have surged 34% in 2019 and 75% in the last two years.
The company has seen its earnings estimate revision activity trend heavily in the right direction recently, especially for fiscal 2019 and 2020. CDW is currently a Zacks Rank #2 (Buy) that sports “B” grade for both Value and Growth in our Style Scores system. CDW’s full-year earnings are projected to jump 13.4% on roughly 8% higher revenues. This growth trend is expected to continue in the following year. CDW also declared a quarterly cash dividend of $0.295 per common share recently, which marked a 40% increase over last year’s dividend. The tech firm currently pays a $1.18 annualized dividend, with a 1.12% yield.
3. Microsoft MSFT
Microsoft is currently the world’s most valuable public company, with a market cap over $1 trillion. Shares of MSFT have outpaced all of the FAANG stocks—Facebook FB, Apple AAPL, Amazon AMZN, Netflix NFLX, and Google GOOGL—over the last two years, with its 82% climb squeaking by second-place Amazon’s 81% but easily topping everyone else. MSFT has returned to impressive growth in recent years as it bolsters its cloud offerings. The firm’s Intelligent Cloud division climbed 19% to $11.4 billion last quarter, with Azure up 64%. MSFT’s Office, Windows, gaming, and other segments have also expanded at a solid pace.
The Redmond, Washington-based giant currently pays an annualized dividend of $1.84, which is up nearly 10% from the prior year’s quarterly payout. Despite MSFT’s climb, the company’s yield still rests at 1.4%. Microsoft is a Zacks Rank #2 (Buy) that rocks “B” grades for Growth and Momentum and the tech company is projected to see its fiscal 2020 and 2021 revenue surge 11% and 10.5%, respectively. At the bottom end of the income statement, MSFT’s adjusted earnings are projected to jump over 10% in its current fiscal year and 13.5% higher in the following year.
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