3 fractional tech stocks to buy in October

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While we often think of the tech sector as a place to look for disruptive growth stocks and names with explosive long-term potential, the tech sector can also be a great place to find high dividend yields.

Although it doesn’t immediately come to mind as a rich sector for dividends in the same way as financials or energy stocks, there are many large tech stocks with high and growing dividends. Let’s take a look at three of the best to buy in October.

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1. Texas Instruments

When looking for high-tech dividend stocks, it’s hard to look past them. Texas Instruments (TXN) When you start the list. Shares of the analog semiconductor giant yield 3%, but there’s more to Texas Instruments than the attractive product that attracts it as a dividend stock. The Dallas-based company has increased its dividend payout for 18 years and counting. This dividend growth has resulted in an impressive 25% compound annual growth rate. Texas Instruments’ dividend payment in 2018 Since 2017, the company has paid $2.12 a share, doubling its current price of $4.60. With management’s strong commitment to creating value for shareholders, Texas Instruments seems like a good bet to raise its dividend payout and join the list of Dividend Aristocrats after seven years.

Texas Instruments is attractive as a dividend stock for its payout stability and safety, in addition to its strong track record and potential for additional dividends. The company currently pays $4.60 per share annually, which is well covered by Texas Instruments’ $9.14 in earnings per share, giving it a dividend payout ratio of about 50%.

Texas Instruments also increases its dividend through extensive buybacks, and the current management team has reduced its stock number by an impressive 46% since taking over in 2004.

With demand for analog chips likely to increase as more devices go digital in the coming years, a safe and growing dividend, and a thoughtful management team with a strong track record of creating value for shareholders, Texas Instruments looks like a high-dividend tech stock. To buy in October.

2. Qualcomm

A profit margin of around 2.5%, Qualcomm’s (QCOM) Dividends may not win the hearts of competing dividend investors at first glance. However, a closer look reveals a lot to like about Qualcomm as a dividend growth stock.

The San Diego-based company has increased its annual dividend every year since 2013, and its new quarterly payout of $0.75 now triples the $0.25 it paid in 2013. Payout rate only 25%.

Qualcomm is expanding into many end markets with great potential. The company is best known for its Snapdragon semiconductors that go into mobile handsets, but it is increasingly moving into edge computing and Internet of Things devices, the automotive market and even Snapdragon-powered metavacs. Meta forumsPopular Oculus Quest 2 headset. Qualcomm has grown its design-win pipeline from $19 billion in the second quarter of 2022 to $30 billion in the third quarter, and predicts a $100 billion market in the automotive industry by 2030.

New revenue streams from automotive, edge computing and beyond should help provide plenty of new fuel for Qualcomm’s dividend to grow over time. The stock is cheap, trading near its 52-week low and trading at just 10 times earnings. The combination of Qualcomm’s growing dividend and likely price appreciation as it enters these new markets makes it a compelling dividend stock to buy and hold for the next decade.

3. IBM

Let’s move on from the semiconductor space and save a high-yielding stock for last: IBM (IBM). The $110 billion company is Dividend Aristocrat, which has grown its annual payout ratio for 28 consecutive years. Shares currently yield well over 5%, which is a compelling payout.

IBM shares have underperformed the broader market over the past decade. But in recent years, the company has taken some bold decisions to transform the 111-year-old company into a modern, high-margin SaaS business. These moves include moving the IT services division to a separate company. Kindergartenand finding Red Hat Software $34 billion to bolster its cloud business. This year, IBM shares are outperforming the broader market and the rest of the technology sector, so the ship may start to turn. IBM is down 11% year-to-date, but this beats a comeback. S&P 500 And Nasdaq At the same time, it decreased by 23% and 31%, respectively. of Select Technology Sector SPDR ETFTechnology stocks are down 30% year to date. The market is forward-looking, and these bold decisions, along with a market-leading dividend yield of more than 5%, should lead to better returns for IBM investors over the next decade than they have experienced in the past.

These three tech stocks yield between 2.5 and 5.5% and offer investors a compelling mix of income, dividend growth and price appreciation over time, proving the tech sector is a good place to stockpile dividends.

Michael Byrne has no position in the mentioned stocks. He has a spot in the Motley Fool and recommends Qualcomm and Texas Instruments. The Motley Fool has a disclosure policy.



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