If any sector has been bludgeoned since the beginning of the year it is technology, and the companies in the sector that make no money have been put in the Wall Street penalty box until further notice. Despite the massive selling across the sector, tech is still a stunning 28% of the market weight of the S&P 500. Old-timers remember the value trap of technology after the dot-com explosion in 2000, when it took 10 years for the sector to repair the self-inflicted damage. The question now is if that be the case again.
A new report from Savita Subramanian, the outstanding equity and quant strategist at BofA Securities, and her team, makes the case that while hedge funds have been big sellers of the sector, the long-only portfolio managers mostly have stood their ground. While wanting to avoid the turn of the century value trap/dead money scenario, the BofA team has compiled a list of stocks that all feature high one-year return on equity, solid relative strength numbers, high earnings-per-share revisions and high free cash flow/enterprise value metrics.
We screened that list for stocks that also pay a solid and dependable dividend. While all are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
The company reported solid earnings, and its stock is a top pick across Wall Street for dividend growth. 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, servers and storage, factory automation, power generation and alternative energy systems and displays.
The BofA analysts and many on Wall Street are very positive on the company’s massive $10 billion share repurchase authorization, which represents about 4.2% of the company’s market cap.
Broadcom stock investors receive a 2.84% dividend. The BofA Securities price target is $750, while the consensus target is just $677.67. The stock closed trading on Wednesday at $565.19.
Investors who are more conservative may want to consider this mega-cap tech leader. 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.
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