10 Best Technology Dividend Aristocrats to Buy
In this article, we discuss 10 best technology dividend aristocrats to buy. You can skip our detailed analysis of tech dividend stocks and their previous performance, and go directly to read 5 Best Technology Dividend Aristocrats to Buy.
Meta’s announcement of its first-ever dividend earlier this year took the tech world by storm. However, this is not the first time any company has initiated a dividend from the sector which is typically recognized for prioritizing buybacks over dividend payouts. According to a report by Goldman Sachs’ portfolio strategy team, slightly less than 40% of the technology companies within the broad-market S&P Composite 1500 distribute dividends. Moreover, some tech stocks are offering dividend yields as high as 3%, which is generally considered very healthy according to analysts.
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Dividend distribution within the tech sector has grown gradually over the years. In 2011, only one in four tech stocks paid dividends to shareholders. Over the past decade, there has been a shift in this trend due to investors showing more interest in dividend-paying equities. A report by S&P Global revealed that as of 2020, 26 companies started paying dividends within the tech sector of the S&P 500, while 59 companies raised their payouts at different times throughout the years. This resulted in a total of 376 dividend increases within the sector. The report also mentioned that over this period, as more Information Technology companies initiated dividends, their impact on the total return of the S&P 500 increased from 9.07% in 2009 to 16.33% in 2019.
Irrespective of the industry, dividend growers have always taken the lead among investors when it comes to investing in dividend stocks. In the case of technology dividend stocks, some might assume that these companies simply maintain their dividends without following any consistent growth. However, this assumption does not hold true, as many technology and tech-related companies are actually known for regularly growing their payouts. According to data from S&P Dow Jones Indices, tech companies within the S&P 1500 index have nearly quadrupled the total dollar value of their dividends by 2022 in comparison to what they paid in 2011. This growth rate stands out as the highest among all sectors, far exceeding the 2.6% increase in dividends from the entire S&P Composite 1500 index during this period.
The S&P Technology Dividend Aristocrats Index, which tracks the performance of tech companies with at least seven consecutive years of dividend growth, has gained 13.27% in the past year. The index is down by 3.15% this year so far. It has reported a strong performance over the years. The index surpassed both the S&P Total Market Index (TMI) Information Technology and the S&P TMI in performance over one- and three-year periods between 2014 and 2022, as reported by S&P Dow Jones Indices. In addition to this, the index exhibited lower volatility than the S&P TMI Information Technology throughout one-, three-, and five-year periods within this timeframe. The report further elaborated that from December 2014 to December 2022, the index saw its dividends grow at an annual rate of 14.72%, compared with the 11.30% and 6.42% growth rates of the S&P TMI Information Technology and the S&P TMI Index, respectively. Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Apple Inc. (NASDAQ:AAPL) are some of the best technology dividend aristocrats to consider, among others that are further discussed in this article.
Photo by Artem Beliaikin on Unsplash
Our Methodology:
For this list, we scanned the holdings of the S&P Technology Dividend Aristocrats Index, which tracks the performance of technology and technology-related companies that have raised their dividend payouts for seven consecutive years or more. Since these stocks belong to the tech sector, their dividend yields tend to be lower comparatively. From the index, we picked 10 dividend stocks that have garnered the most attention from hedge fund investors by the conclusion of Q4 2023, using data from Insider Monkey’s database. The stocks are ranked in ascending order of the number of hedge funds having stakes in them. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
10. Badger Meter, Inc. (NYSE:BMI)
Number of Hedge Fund Holders: 29
Badger Meter, Inc. (NYSE:BMI) is an American company that provides water metering technology and flow solutions to its consumers. The company recently announced its Q1 2024 earnings and posted a revenue of $196.2 million, which showed a 23.3% growth from the same period last year. Its operating cash flow for the quarter also jumped to $21.4 million during the quarter, from $18 million in the prior year period.
Badger Meter, Inc. (NYSE:BMI) currently offers a quarterly dividend of $0.20 per share. The company has raised its dividends for 31 consecutive years, which makes BMI one of the best technology dividend aristocrats on our list. The stock has a dividend yield of 0.60%, as of April 22. Other tech stocks to consider include Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Apple Inc. (NASDAQ:AAPL).
The number of hedge funds tracked by Insider Monkey owning stakes in Badger Meter, Inc. (NYSE:BMI) grew to 29 in Q4 2023, from 21 in the previous quarter. The overall value of these stakes is more than $241.2 million. Among these hedge funds, Impax Asset Management was the company's leading stakeholder in Q4.
9. Microchip Technology Incorporated (NASDAQ:MCHP)
Number of Hedge Fund Holders: 42
Microchip Technology Incorporated (NASDAQ:MCHP) is an Arizona-based company that specializes in microcontroller, analog, and mixed-signal integrated circuits. On February 1, the company declared a 2.5% hike in its quarterly dividend to $0.45 per share. This was the company's 80th dividend hike since the initiation of its dividend policy in 2003. With a dividend yield of 2.19% as of April 22, MCHP is one of the best technology dividend aristocrats on our list.
At the end of Q4 2023, 43 hedge funds in Insider Monkey's database held stakes in Microchip Technology Incorporated (NASDAQ:MCHP), up from 42 in the previous quarter. The total value of these stakes is nearly $840 million. With over 1.5 million shares, Platinum Asset Management was the company's leading stakeholder in Q4.
8. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 50
International Business Machines Corporation (NYSE:IBM) is next on our list of the best technology dividend aristocrats to buy now. The American multinational company offers a wide range of technology, software, and consulting services and products. In the fourth quarter of 2023, the company reported a strong cash position with its operating cash flow of nearly $14 billion and its free cash flow coming in at $11.2 billion. During the quarter, the company returned over $1.5 billion to shareholders through dividends, which makes IBM one of the best technology dividend aristocrats on our list.
International Business Machines Corporation (NYSE:IBM) currently offers a quarterly dividend of $1.66 per share. The company has raised its payouts for 28 consecutive years. The stock supports a dividend yield of 3.67%, as of April 22.
As of the close of Q4 2023, 50 hedge funds tracked by Insider Monkey held stakes in International Business Machines Corporation (NYSE:IBM), compared with 53 in the preceding quarter. These stakes are worth roughly $2 billion in total. Ken Griffin, Israel Englander, and Cliff Asness were some of the most popular hedge fund investors in the companyin Q4.
7. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 55
Texas Instruments Incorporated (NASDAQ:TXN) is an American semiconductor company that offers related components and solutions across various markets. The company's current quarterly dividend comes in at $1.30 per share for a dividend yield of 3.21%, as of April 22. It is one of the best technology dividend aristocrats on our list as the company has grown its payouts for 12 consecutive years.
In the fourth quarter of 2023, Texas Instruments Incorporated (NASDAQ:TXN) reported an operating cash flow of roughly $2 billion and its free cash flow for the period came in at $776 million. The company's free cash flow made up 7.7% of the revenue. During the quarter, it paid over $1.1 billion to shareholders through dividends.
Insider Monkey's database of Q4 2023 indicated that 55 hedge funds held stakes in Texas Instruments Incorporated (NASDAQ:TXN), growing from 53 in the previous quarter. The collective value of these stakes is more than $2.3 billion. First Eagle Investment Management was the largest stakeholder of the company in Q4.
6. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 60
Cisco Systems, Inc. (NASDAQ:CSCO) ranks sixth on our list of the best technology dividend aristocrats to buy. The California-based tech company reported an operating cash flow of $0.8 billion in its fiscal Q2 of 2024. It returned $1.6 billion to shareholders through dividends during the quarter.
Cisco Systems, Inc. (NASDAQ:CSCO) has been rewarding shareholders with growing dividends for the past 17 years. The company pays a quarterly dividend of $0.40 per share and has a dividend yield of 3.32%, as recorded on April 22. CSCO can be added to dividend portfolios alongside other tech stocks, such as Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Apple Inc. (NASDAQ:AAPL).
Cisco Systems, Inc. (NASDAQ:CSCO) was a part of 60 hedge fund portfolios at the end of Q4 2023, compared with 64 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a collective value of over $2.7 billion. With over 12 million shares, Cliff Asness' AQR Capital Management was the company's leading stakeholder in Q4.
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Disclosure. None. 10 Best Technology Dividend Aristocrats to Buy is originally published on Insider Monkey.