When constructing an income-generating portfolio, popular sectors that investors target often include utilities, finance, or consumer staples.
Income investors are typically less attracted to the tech sector, as these companies frequently use cash to fuel growth and spur innovation. However, there’s a wide variety of those out there that reward their shareholders nicely.
Three technology stocks – NetEase NTES, MSCI MSCI, and Dell Technologies DELL – all pay their shareholders. In addition, all three have seen their earnings outlooks shift positively over the last several months, reflecting optimism among analysts.
For those seeking a passive income stream paired with technology exposure, let’s take a closer look at each.
NetEase, a current Zacks Rank #1 (Strong Buy), is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. Analysts have taken their earnings expectations higher across all timeframes.
NTES shares currently yield a solid 2.1% annually, nicely above the Zacks Computer & Technology The company’s payout has grown nicely over the recent years, sporting a 26% five-year annualized dividend growth rate.
NetEase recently announced an 11% increase to its quarterly dividend to $0.52 per share, compared to $0.47 per share previously.
In addition, NTES shares aren’t valuation stretched given its forecasted growth, with earnings forecasted to climb 30% in its current year. Shares currently trade at a 15.5X forward earnings multiple, well beneath the 26.1X five-year median.
MSCI is a leading provider of critical decision support tools and services for the global investment community, widely known for ESG research and ratings. Currently, the company sports a Zacks Rank #2 (Buy), with earnings expectations modestly increasing across the board.
MSCI shares currently yield 1.1% annually paired with a payout ratio sitting at 46% of the company’s earnings. Like NTES, MSCI is committed to increasingly rewarding shareholders, sporting a 22% five-year annualized dividend growth rate.
The company also sports a solid growth profile, with Zacks Consensus Estimates suggesting 15% earnings growth on 11% higher revenues in its current fiscal year (FY23). And peeking ahead to FY24, estimates allude to a further 14% uptick in earnings paired with a 10% sales increase.
Dell Technologies, a current Zacks Rank #1 (Strong Buy), provides information technology solutions. Analysts have raised their expectations among all timeframes, with the revisions trends particularly notable for its current and next fiscal years.
DELL shares currently yield 2.1% annually paired with a sustainable payout ratio sitting at 24% of the company’s earnings. The company’s payout has grown by a solid 12.1% just over the last year following a recent payout boost.
It’s worth noting that the company has consistently exceeded quarterly expectations as of late, beating the Zacks Consensus EPS Estimate by an average of 40% across its last four releases. Just in its latest print, Dell posted a 54% EPS beat and reported revenue 10% ahead of expectations.
Who doesn’t love dividends? They provide a passive income stream, allow for maximum returns through dividend reinvestment, and provide a shield against drawdowns in other positions.
And who doesn’t love technology stocks? Their explosive growth and momentum in 2023 are hard to ignore, with many looking for exposure.
All three reward their shareholders nicely and sport favorable Zacks Ranks, with the latter reflecting optimism among analysts.
This article originally appeared on Zacks
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.