When investors think of tech stocks, they don’t often think of dividends. And dividend investors don’t often think about tech stocks. However, there are undervalued tech stocks with dividends that are worth focusing on.
In fact, there are a handful of tech stocks with low valuations and attractive dividends. Of course, not all tech stocks with nice dividends are worth buying, but a handful of them certainly are.
As investors continue to fish for a low in the stock market, many of these stocks are worth buying on pullbacks by the market.
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Regardless of what the Fed is doing or how stocks are trading, businesses in the U.S. remain relatively healthy. Although the demand for their products and services is easing somewhat, they are generally holding up well.
Let’s look at several tech stocks with dividends right now.
Ticker | Company | Current Price |
Broadcom | $448 | |
International Business Machines | $135 | |
Intel | $27.80 | |
Hewlett Packard Enterprise | $13.80 | |
Cisco Systems | $43.65 |
Undervalued Tech Stocks With Dividends: Broadcom (AVGO)
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Chip stocks have had a hard time recently, as this group has been pulverized in 2022. However, Broadcom (NASDAQ:AVGO) is a name worth considering.
At its current prices, Broadcom offers a unique combination of stability, value and yield.
Analysts, on average, expect AVGO to deliver 21% revenue growth this year and 6% growth next year. That’s alongside average forecasts calling for 34% and 8% earnings growth this year and next year, respectively.
Broadcom is trading at an attractive 12 times this year’s earning. While it’s possible that analysts’ mean forecasts won’t prove accurate, the fact that analysts are upbeat on AVGO is positive.
Add in the stock’s 3.5% dividend yield, and AVGO is poised to succeed. If AVGO stock revisits the low $400s, it will be hard to ignore.
Undervalued Tech Stocks With Dividends: International Business Machines (IBM)
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So many investors are obsessed with tech stocks, but most of them overlook the dinosaurs of the sector. One such dinosaur is International Business Machines (NASDAQ:IBM).
No one seems to give this stock any love, yet they are ignoring the obvious: IBM has been a relative strength leader!
Given that fact, it may be an under-the-radar find for some investors.
Analysts, on average, expect 5% revenue growth from IBM this year alongside 15% earnings growth. That’s very high for IBM, as those who have followed this stock for the last decade know. As for next year, analysts expect about 6% earnings growth on sub-1% revenue growth.
At current prices, investors are paying about 15 times earnings and collecting a 4.8% dividend yield. When I last looked at IBM stock about a month ago, it had a lower valuation and a higher yield, but the stock has rallied more than 13% since then
For the year, the shares are now up about 1% versus the Nasdaq’s 33% decline. Over the last 12 months, IBM is up 11.5% while the Nasdaq is down 35%.
How’s that for outperformance?
Undervalued Tech Stocks With Dividends: Intel (INTC)
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Intel (NASDAQ:INTC) has been around forever and will likely remain around forever. However, its longevity can’t mask reality, which is rather bleak for the chipmaker at the moment.
Intel is not growing, as shown by its 15.5% year-over-year revenue decline in Q3. The sharp drop of global PC sales, identified by Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL). may continue.
Analysts’ estimates of Intel’s revenue growth could be better, but it has a 5.2% dividend yield and a healthy payout ratio. It recently raised more cash via the Mobileye (NASDAQ:MBLY) IPO, while INTC still holds some MBLY stock, and INTC will benefit if MBLY rises further.
All that said, I would love to see Intel fall below $25 before buying it. After the shares’ recent rally, their valuation is no longer as attractive as it once was. Plus, as we’re hearing from other semiconductor and chip companies, the sector is not doing well.
But Intel will survive the test of time.
Hewlett Packard Enterprise (HPE)
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PCs may be a problem, but not for Hewlett Packard Enterprise (NYSE:HPE). This company, is focused on “a cloud operating experience, built-in security, and optimized performance for your workloads to drive your business forward.”
That puts it in a different position than HP Inc. (NYSE:HPQ) and leaves it in a well-suited to focus on other areas of tech. Unfortunately however,, growing has not been easy for HPE.
Analysts expect mild revenue and profit growth this year and next year, but on the plus side, their average estimates do call for top-and bottom-line gains. Further, the shares trade at a meager seven times earnings.
Consequently, HPE stock, which pays a 3.5% dividend yield, may be worth watching.
Cisco Systems (CSCO)
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Finally, we have Cisco Systems (NASDAQ:CSCO). While it was a darling of investors during the dot-com bubble 20 years ago, that has not been the case in recent years. Cisco has performed okay, but it has been anything but a runaway train.
However, Cisco may be worth an extra look amid the current downtrend.
Worth noting is that the stock trades at just 12.5 times this year’s earnings estimates and pays a 3.4% dividend yield. Cisco is not the most exciting name on this list, but its dependability and low valuation are worth focusing on.
On average, analysts expect 5% earnings and revenue growth from CSCO this year. However, in 2023, analysts’ mean outlook call for 7% earnings growth on and just 4% revenue growth. If CSCO can deliver that type of mid-level growth alongside a solid yield, then we may see the stock push higher over time.
A decline of the shares below $40 would have my attention even more.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
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Source: https://finance.yahoo.com/news/7-undervalued-tech-stocks-dividends-160053472.html