While rates have certainly gone higher over the past month, the bottom line is we still are in a low rate environment, and it appears one good thing to do when investing, regardless of your risk tolerance, is look for stocks that also pay a reasonable dividend. The combination of a stock’s price appreciation and the dividend yield is called total return, and it almost always makes for a winning investment combination.
This week’s top value calls from Jefferies highlight some outstanding technology stocks that also pay a dividend. While these are suitable for more aggressive accounts, they combine outstanding growth prospects and a dividend that may also be increased over time. All four are rated Buy at Jefferies.
Broadcom
This is the combined entity that was formerly known as Avago and Broadcom. Broadcom Ltd. (NASDAQ: AVGO) is a leading designer, developer and global supplier of a broad range of analog and digital semiconductor connectivity solutions. Its extensive product portfolio serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial and other.
Applications for the company’s products in these end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and displays.
The company produces radio frequency (RF) front-end for LTE-enabled Apple products. Wall Street estimates that the company does 15% of its total business with Apple. Additional estimates are that the company has between a 13% and 17% revenue exposure to Apple in the wireless communications segment, which was guided up 10% or more quarter over quarter for the third quarter. Customer diversity and content for Samsung could be more than enough to offset slower Apple business.
Top Wall Street analysts like the leadership in the mobile, data center and broadband markets, and especially in the RF arena. Many on Wall Street see a cyclical rebound in industrial and communications demand.
Broadcom investors are paid a 1.3% dividend. The Jefferies price target for the stock is $185, and Thomson/First Call consensus price target is $179.04. Shares closed Wednesday at $151.53.
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