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For many years, the technology sector was not associated with dividend payouts. Indeed, the technology sector is more closely linked with growth, which is why tech stocks are primarily known as growth stocks.

But this has changed a lot in the past decade. Many technology stocks now pay dividends. And, thanks to their strong profitability and free cash flow, tech stocks can grow their dividends at a high rate each year.

This article will discuss 3 tech stocks that combine growth and dividends.

Qualcomm Inc. (QCOM)

Qualcomm is a semiconductor company that develops and sells integrated circuits for use in voice and data communications. The chip maker receives royalty payments for its patents used in devices that are on 3G, 4G, and 5G networks.

In the fiscal 2023 third quarter, revenue fell nearly 23% to $8.44 billion but adjusted earnings-per-share of $1.87 beat estimates by $0.06. For the quarter, revenues for Qualcomm CDMA Technologies, or QCT, declined 24% to $7.17 billion. Automotive grew 13% to $434 million while Handsets decreased 25% to $5.26 billion and Internet of Things was down 24% to $1.49 billion. Qualcomm Technology Licensing, or QTL, fell 19% to $1.23 billion.

Qualcomm generates strong cash flow which allows the company to return cash to shareholders. Last quarter Qualcomm repurchased four million shares to reduce its share count, which will boost future EPS growth.

The company has grown earnings-per-share at a rate of 6.6% per year over the last decade. An agreement with Apple and Huawei, a lower share count, and leadership in 5G should allow the company to grow in the coming years. We also believe that demand for 3G/4G/5G headsets will increase following a recovery from the COVID-19 pandemic.

On April 12th, 2023, Qualcomm increased its quarterly dividend 6.7% to $0.80, marking the company’s 21st consecutive year of dividend growth. QCOM stock yields 2.8%.

Cisco Systems (CSCO)

Cisco is the global leader in high performance computer networking systems. The company’s routers and switches allow networks around the world to connect to each other through the internet. Cisco also offers data center, cloud, and security products. The company generates about $53 billion in annual revenues.

On August 16th, 2023, Cisco announced earnings results for the fourth quarter and full fiscal year. For the quarter, revenue grew 16% to $15.2 billion, which was $150 million above estimates. Adjusted earnings-per-share of $1.14 compared favorably to adjusted earnings-per-share of $0.83 in the prior year and was $0.08 more than expected.

For the fiscal year, revenue grew 11% to $57 billion while adjusted earnings-per-share of $3.89 compared to $3.36 in the prior year. Beginning with the first quarter of fiscal year 2022, Cisco has renamed its business segments. For the quarter, Secure Agile Networks, formerly known as Infrastructure, grew 12%, End-to-End Security, formerly known as Security, improved by 9%, and Optimized Application Experiences was up 7%.

With everything from computers to cell phones to buildings connected today, Cisco is in a prime position to capitalize on the Internet of Things. In fact, Cisco is responsible for 80% of all the data moved over the internet in the past 30 years.

While Cisco continues to enjoy hardware dominance, the company is attempting to become more of a subscription services company. This should help create more predictable revenue streams. One such example of this effort is the Catalyst 9K switch. This switch is twice as fast as competing products and protects data and cloud networks.

Cisco is a shareholder-friendly company that returns lots of cash to investors. Cisco returned $2.8 billion to shareholders in the most recent quarter. Cisco ended the fourth quarter of fiscal 2023 with $26.1 billion in cash and equivalents. Given the cash on the balance sheet, it is likely that Cisco would be able to continue to pay a dividend even in the event of an extended recession.

On February 15th, 2023, Cisco announced a 2.6% dividend increase in the quarterly payment to $0.39. Cisco has increased its dividend for 13 consecutive years. Cisco stock yields 2.7%.

Apple Inc. (AAPL)

Apple is a tech giant, and the largest publicly-traded company in the world. Apple stock has a market capitalization of $2.94 trillion. The company has a diverse lineup of popular products such as the iPhone, iPad, Mac, and Apple Watch. The company also has a large services business such as iTunes and the App Store.

2023 has been a challenging year for Apple as the company has seen product sales decline due to the global economic slowdown. Last quarter, revenue declined 1.4% as product sales declined 5.7%. Services sales grew 8.2% to partially offset the decline.

Still, Apple generated 5% earnings-per-share growth last quarter, as the company utilized a significant amount of cash for buybacks to reduce its share count. 

Apple has raised its dividend for 11 years, every year since it initiated its dividend in 2012. The 2023 expected dividend payout ratio is 16%, indicating a highly secure dividend with lots of room for continued dividend increases. Apple stock currently yields 0.6%.

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