2 Dividend-Paying Tech Stocks to Buy Right Now – The Motley Fool

The stock market is one of the world’s best wealth creation tools, but it can be subject to high short-term volatility for some investors. Fortunately, dividend stocks provide investors with income regardless of stock price performance. This is a way to encourage investors to be patient and focus on the long term.

Tech stocks get a lot of attention because of their share price growth potential, but many also offer dividends. For investors looking for tech stocks with solid returns, the following two companies are good choices. They each play an important role in their respective industries and are well-positioned as long-term income sources for investors.

1.AT&T

AT&T (T 1.27%) It has been the bane of many investors’ portfolios over the past decade. The stock has fallen more than 30% in that period, but is up 20% in the past six months, giving investors a glimmer of hope for a turnaround.

Much of AT&T’s recent woes can be traced to its attempts to enter the media and entertainment business, but the company has taken steps to wind down its operations and refocus on its core communications business.

In the first quarter of 2022, AT&T spun off its WarnerMedia business and cut its dividend in half, but it remains one of the world’s highest dividend stocks. S&P500. Over the past 12 months, the dividend yield has been more than 6.3%, nearly five times the S&P 500 average.

Investors were (understandably) concerned about AT&T’s dividend stability due to its high debt burden, but recent financial performance should put those concerns to rest. In 2023, AT&T earned $16.8 billion in free cash flow, more than enough to cover dividends and debt, and $2.6 billion more than in 2022.

T Free cash flow Depends on the data Y chart

AT&T’s refocus on its business appears to be paying off, with the company adding 1.7 million 5G wireless postpaid customers and 1.1 million fiber customers in 2023. The company also reduced its net debt by more than $3 billion over the period, increasing its financial flexibility.

Investors can rest assured that AT&T can be a reliable income stock for their portfolios, as the company appears to be heading in the right direction. While there may not be plans for a dividend increase in the near future, it doesn’t seem like the dividend will be cut either.

2. Taiwan Semiconductor Manufacturing Company

taiwan semiconductor manufacturing (TSM 0.36%) (TSMC) is one of the world’s most unique technology companies. The company produces semiconductor chips using a foundry model, producing chips for the needs of other companies rather than for general sale. Companies can’t go online or into a store to buy TSMC chips, but they can say “I’m building ABC and I need chips for XYZ” and TSMC will (usually) make it happen. can.

This foundry model has worked well for TSMC, and many other semiconductor companies have copied it in hopes of similar success, but none can match the quality of TSMC’s chips. That’s why TSMC is the go-to for world-class companies such as: apple, Nvidiaand dozens more.

Semiconductors for smartphones account for a large portion of TSMC’s revenue (43% in Q4 2023), so the recent downturn in this market has weighed on the company’s financials somewhat, but investors are It shouldn’t be a long-term problem that needs to be addressed. worried. The worst of the cyclical recession appears to be behind us, according to International Data Corporation’s mobile phone tracking survey.

TSM Revenue (Quarterly YoY Growth) Depends on the data Y chart

TSMC’s chips are essential to the technology ecosystem and solidify the company’s long-term position in the industry. For investors seeking income, this is one of the best characteristics he can hope for.

TSMC’s dividend yield, at just over 1.5%, isn’t as impressive as AT&T’s, but it’s not terrible considering the accompanying growth in the company’s stock price. He could truly be a two-for-one advantage for investors.