Investors that missed the huge ascent of mega-cap tech stocks like Amazon and Apple are probably wondering if now is the time to jump in and buy after the recent big sell-off. The reality is that while the huge market leaders will probably continue to dominate in specific silos, many are overbought and could be the most susceptible to a continued big correction, despite Wednesday’s rebound. With the election less than two months away, and the likelihood of increasing volatility, those looking to own tech may want to focus on the dividend leaders in the sector.
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We screened our 24/7 Wall St. research database looking for technology stocks that also pay sizable dividends and are rated Buy at major Wall Street firms. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Broadcom
This stock has rallied smartly off the lows and offers big upside potential. Broadcom Inc. (NASDAQ: AVGO) has an extensive semiconductor product portfolio that addresses applications within the wired infrastructure, wireless communications, enterprise storage and industrial end markets.
Applications for Broadcom’s products in its 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.
Top Wall Street analysts like Broadcom’s leadership in the mobile, data center and broadband markets, and especially in the radio frequency (RF) arena. Many on Wall Street see a cyclical rebound in industrial and communications demand on the horizon.
BofA Securities is very positive but did note the company’s large 15% exposure to iPhones. The firm said this when the company reported last week:
Fiscal third quarter beat and fiscal fourth quarter ahead on 5G iPhone (wireless 50%+ quarter-over-quarter) & sustained cloud/networking (better than expected). We like the company’s diverse growth well positioned to benefit from trends of cloud/5G; 53% Free-cash-flow margin with room for a 10% dividend boost.
Broadcom stock investors receive a 3.71% dividend. BofA Securities analysts have raised the price target to a massive $450. The Wall Street consensus target is $397.86, and shares closed trading on Wednesday at $360.03.
Cisco
This is a mega-cap tech leader for more conservative accounts to consider. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.
It provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
Cisco’s cybersecurity products give clients the scope, scale and capabilities to keep up with the complexity and volume of threats. Putting security above everything helps corporations innovate while keeping their assets safe.
The company reported in-line revenues for the quarter, but the disappointing guidance caused some sellers to come in. Many on Wall Street remain positive as 5G, 400G, optical and WiFi 6 are expected to drive 2021 growth.
Shareholders receive a 3.60% dividend. The $52 BofA Securities target price compares with the posted consensus target of $49.17. Cisco Systems stock closed at $40.13 on Wednesday.
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