Microsoft, Apple, and Nvidia are competing for the title of the biggest company in the world in terms of market cap—and they’re going head to head. Apple’s AI announcement during the Worldwide Developers Conference (WWDC24) briefly put it ahead of Microsoft, but it fell back to the number two spot after some profit-taking.
Meanwhile, Nvidia, the newcomer in the trillion-dollar club, is quietly gaining ground on the two established tech giants, driven by the massive demands for its data center products and services optimized for AI.
The world's five most valuable companies—including Google and Amazon—are in the tech sector. Investors flock to tech companies, driving prices to new and higher highs. However, the sector's massive price movements and sudden reversals might not be the best choice for risk-averse income investors.
So, how do you participate in the tech industry’s massive growth while maintaining a safe, defensive portfolio? Simple: invest in high-yield tech stocks. So, let’s look at the top three highest-yielding buy-rated tech stocks in the market.
How I Chose The Following Companies
To get the following list, I used Barchart’s Stock Screener feature. It’s user-friendly, intuitive, and quite simple to use, which is why I use it for nearly all of my stock selection and market analyses.
I screened for the top three highest-yielding buy-rated tech stocks by going to the Screener page and adding the following filters:
Market Sectors
- Computers and Technology. With this filter, I can screen every tech company listed in the NASDAQ, AMEX, NYSE, OTC-US, and non-common stock lists.
- Annual Dividend Yield
- Blank. I typically leave the yields field blank so that it will appear on the search results page. After that, I can click on its column head and arrange the results from high to low or low to high.
- Current Analyst Rating
- 3.5 to 5. Stocks with a 3.5 to 4.4 rating are rated as a moderate buy, while 4.5 and up are strong buys.
- Number of Analysts
- 8 and above. Having more analysts covering the stock makes their ratings more relevant in my eyes.
With these criteria, Barchart Screener gave me 226 results. With a click of a mouse button, I rearranged the list from highest to lowest yields. After that, I took the top three, and now I’ll discuss each of them, starting from number three:
HP Inc (HPQ)
I can practically guarantee that anyone who’s been around the tech space—or anyone who has used a computer semi-regularly—from the 2000s onward has used an HP product. The company produces computer parts and accessories, including peripherals, access devices, printers, etc. It also offers technology solutions for security, sales, small to medium businesses, government, and schools.
HP’s 2023 ended on a mildly sour note, with revenue dropping by 14.6% YOY. However, diluted EPS increased by 9%, beating expectations. “We executed well in a tough market,” said President and CEO Enrique Lores, “and innovated in our key growth areas to finish the year with good momentum.”
The company pays a $0.2756 dividend per share quarterly, translating to $1.1024 annually or a 3.02% forward yield. HPQ stock is rated as a moderate buy with a score of 3.69 from 13 analysts.
OpenText Corporation (OTEX)
OpenText is a networking and technology company that offers products and services for various industries, including banking, insurance, healthcare, energy, industrial manufacturing, utilities, and more. Most of OpenText’s platforms, with AI-led solutions and analytics, are offered via cloud services.
OTEX stock has a 3.80 rating based on 10 analysts—the highest on this list, and it’s not hard to see why. Total revenues in FY’23 increased by 28.4% YOY. Annual recurring and cloud revenues also saw impressive double-digit growths, to 26.2% and 10.8%, respectively.
The company pays a $1.00 annual dividend rate, translating to a 3.50% yield. However, based on the historical dividends schedules, OpenText is set to increase payouts in the next announcement, so yields might still go up.
Cisco Systems Inc (CSCO)
Cisco is one of the most prominent networking companies in the world. It offers its products and services to commercial, business, and retail customers worldwide. The company covers many areas in the tech industry, including the Internet of Things, wireless and mobility, cloud computing, and data centers. Perhaps its most notable offering is its certifications, which are recognized in the industry and include dev, cyber security ops, networking, and more.
Cisco ended FY’23 with an 11% YOY increase in revenue. EPS reached $3.07, up 9% from last year. The company is confident it will continue the trend, with revenue and EPS guidance for 2024 set higher than 2023 results.
As for dividends, the company has a $1.60 forward annual rate, translating to a 3.51% yield. Twenty-four analysts also rate CSCO stock as a moderate buy with an average score of 3.5.
Excluded: Tim S.A. ADR (TIMB)
While Tim S.A., or TIM Brazil ADR, was supposed to be the highest-yielding tech stock on the list, its dividend payments and schedules fluctuate wildly, unlike those of the three stocks discussed.
Final Thoughts
The stock market has no hard and fast rules, and nothing says you can’t mix things up occasionally. So, invest in high-yield tech stocks to get the safety and income of a dividend stock and participate in the massive growth potential of the tech sector.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
