When constructing an income-generating portfolio, typical sectors that are targeted by many include utilities, finance, or consumer staples.
And as many are aware, companies in the technology sector are generally not targeted by income-focused investors, as it’s common for them to utilize cash to fuel growth.
However, there are still plenty of stocks from the Zacks Computer and Technology sector that reward their shareholders handsomely, including Hewlett-Packard Enterprise HPE, Garmin GRMN, and ASE Technology ASX.
Below is a chart illustrating the performance of all three stocks over the last year, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
For those interested in technology exposure paired with an income stream, let’s take a closer look at each one.
Hewlett-Packard Enterprise
Hewlett-Packard Enterprise was formed due to the split of Hewlett-Packard Company into two separate entities, now focusing on the enterprise-facing hardware and service segments. Currently, HPE is a Zacks Rank #2 (Buy).
HPE’s annual dividend currently yields 2.9% paired with a respectable 6.5% five-year annualized dividend growth rate. As we can see, HPE’s annual yield easily exceeds the Zacks Computer and Technology sector average.
Image Source: Zacks Investment Research
In addition, HPE shares currently trade at a reasonable 0.7X forward price-to-sales ratio, nearly in line with the five-year median and well below the Zacks sector average.
HPE carries a Style Score of “A” for Value.
Image Source: Zacks Investment Research
Garmin
Garmin is an OEM of navigation and communication solutions incorporating global positioning system (GPS)-based technology. GRMN presently sports a Zacks Rank #2 (Buy).
Garmin’s annual dividend stands tall at roughly 3.1%, crushing the Zacks Computer and Technology sector average.
Impressively, the company has upped its payout five times over the last five years, translating to an 8.1% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Garmin posted strong bottom line results in its latest release, exceeding the Zacks Consensus EPS Estimate by roughly 12.7%. Quarterly revenue came in modestly below expectations, the second instance across its last ten quarters.
Image Source: Zacks Investment Research
ASE Technology
Based in Taiwan, ASE Technology provides semiconductor manufacturing services in assembly and testing. The company is currently a Zacks Rank #2 (Buy).
ASX’s dividend metrics are the most impressive of all three; the company’s annual dividend currently yields a solid 4.8%, nowhere near the Zacks sector average.
And to top it off, the company’s payout has grown by a rock-solid 27% over the last five years.
Image Source: Zacks Investment Research
Bottom Line
Dividends have become a hot topic within the market following a challenging 2022, as they give a nice cushion and provide a reliable income stream.
Of course, the technology sector certainly isn’t an area that receives a lot of attention from income-focused investors.
However, with technology stocks staging a rebound in 2023, those with a preference for income may be seeking exposure to the sector.
All three stocks above from the Zacks Computer and Technology sector – Hewlett-Packard Enterprise HPE, Garmin GRMN, and ASE Technology ASX – pay their investors nicely.
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Free: See Our Top Stock And 4 Runners Up
Garmin Ltd. (GRMN) : Free Stock Analysis Report
ASE Technology Holding Co., Ltd. (ASX) : Free Stock Analysis Report
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
