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3 Rising Dividend Tech Stocks Worth Buying

May 8, 2021 5 min read

This story originally appeared on MarketBeat

Many investors like to focus on stocks that increase their dividends year after year. They are generally in excellent financial health and generate reliable income for a long-term portfolio.

A great place to find companies that consistently pay higher dividends is the Nasdaq US Rising Dividend Achievers Index. It contains 50 stocks that have increased their dividends in the past and are capable of holding the pattern going forward. The index has reached an annualized rate of 15% since its inception in January 2014.

Interestingly, about a quarter of the index is made up of technology companies that offer not only rising dividends but also solid growth potential. Here we highlight three of those names that offer growth and income investors the best of both worlds.

Has Qualcomm increased its dividend?

Over the past 12 months, Qualcomm (NASDAQ: QCOM) has paid quarterly dividends totaling $ 2.60. In the previous 12 months, dividends were $ 2.48, so that’s 5% annualized dividend growth.

Next month, Qualcomm’s quarterly dividend will increase by another $ 0.03 to $ 0.68. Assuming this dividend remains intact over the next three quarters, the wireless communications leader will pay out $ 2.72 in dividends over the next 12 months. This equates to a 2% dividend yield and compares favorably with the S&P 500’s 1.4% return.

There is good reason to believe that Qualcomm’s rising dividend trend will continue. That’s because the company’s cash position is strong relative to its debt burden. The cash-to-debt ratio of 73% is well above the Rising Dividend Achievers threshold of 50%.

Beyond the revenue side of the investment, Qualcomm has strong upside potential as a smartphone chip supplier at the start of the 5G network build-out. The company comes off a blow in the second quarter of fiscal year 2021, during which it achieved the success of Apple’s 5G iPhone 12 launch as one of Apple’s main suppliers. With 5G phones to become the new device, you need to seek out Qualcomm’s earnings and dividends to keep growing.

Is it a good time to buy Apple stock?

Even a behemoth like Apple (NASDAQ: AAPL) with its $ 2.2 trillion market cap has room to grow and continue to reward shareholders with higher dividends. It has increased its dividend for eight consecutive years and certainly has the financial strength to continue to do so.

On May 7, Apple went ex-dividend, meaning shareholders who owned the stock before this date will receive a payout of $ 0.22 per share on May 13. Those who bought Apple on or after May 7 will have to wait for the next quarter’s dividend.

Since climbing to a split-adjusted record of around $ 145, Apple stock has corrected about 10%. If we learned a thing or two about Apple’s trading history, those rare fixes were great buying opportunities.

Part of the reason Apple’s stock is relatively flat in 2021 is concerns about the unusual debt hunger in recent periods. Still, it is difficult to blame the company, given the availability of low-interest financing and the growth prospects at hand.

As debt has increased, Apple’s infamous money supply has been depleted due to its aggressive stock buyback program. But this, too, should be viewed as a positive, as it indicates that management is confident in the company’s growth prospects and believes the stock is undervalued.

Apple’s $ 0.88 annual dividend and 0.7% forward return are not much. But this cash cow is poised to pack on a few pounds as iPhone 12 sales soar and recurring revenue from services becomes a bigger part of the business. Next year this time, Apple will again increase its dividend and far exceed Street’s expectations, as it often happens.

Is Activision Blizzard paying a dividend?

Activision Blizzard (NASDAQ: ATVI) is a lesser-known dividend grower likely to be in store for many years to come as one of Nasdaq’s Rising Dividend Achievers. Thanks to the tremendous success of its video game portfolio, its cash position has grown to more than $ 9 billion. This tops its long-term debt balance of $ 3.6 billion and gives the company plenty of room to increase its dividend payout ratio of 23%.

The popularity of its globally recognized game franchise has taken a whole different level during the pandemic. People who spend more time at home spend more time on gaming thrills such as ‘Call of Duty’ and ‘World of Warcraft’. As a result, recent earnings have been spectacular.

The 0.5% dividend yield is more of an afterthought in the case of Activision Blizzard, given its growth profile. Nevertheless, investors can bank the dividend or, better yet, reinvest the money in the ATM that is Activision Blizzard.

Like other pandemic beneficiaries, growth is likely to slow as gamers emerge from their basements and venture out into the post-COVID world. But Activision Blizzard will still be able to deliver strong growth by building its huge customer base and launching new hit titles. For investors, any weakness in this rising dividend game is a duty to grab some stocks.

Recommended article: Understanding the Two Types of Arbitration

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