3 Dividend-Paying Tech Stocks to Buy in October
The common narrative around technology is usually one of growth. However, there are quite a few mature dividend stocks out there, whose payouts should also grow handsomely along with revolutions in cloud computing, artificial intelligence, 5G, and the Internet of Things.
With many tech stocks having sold off recently on fears of higher interest rates, the following three stocks all look like solid buys on the recent dip. And while their current yields may not turn many heads, those yields should grow handsomely in the years to come as those tech trends take off.
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Micron is a new dividend payer
OK, so a 0.56% dividend won’t exactly light up the scoreboard, but Micron Technology (NASDAQ:MU) just recently initiated its first dividend in 25 years, so it’s a big deal even if today’s yield doesn’t wow income investors.
Micron’s management has also stressed that it intends to regularly raise that payout. In its recently reported quarter, management also returned a lot more cash to shareholders in the form of share repurchases. Last quarter, the company repurchased $1.05 billion in stock, much higher than the roughly $113 million it will pay in quarterly dividends. At that rate, management could repurchase about 5% of Micron’s shares annually at this market cap.
While Micron did beat analyst expectations on revenue and earnings per share, its stock sold off slightly on weaker-than-expected guidance for the upcoming quarter, and it’s now down about 26.5% from the all-time high set back in April.
Yet the reason for the soft guidance shouldn’t really alarm long-term investors. Management cited as the culprit a supply shortage among PC manufacturers, who can’t source enough of certain non-memory chips to meet demand. If you can’t make a full computer, you don’t need to buy as much memory, so those customers are delaying memory purchases.
In spite of the shortage, management said end customer demand for PCs remains strong, so those bits will eventually be sold. And the PC sector is only one of several end-markets for Micron’s memory chips; management cited no supply demand imbalances with the others.
Basically, Micron’s sell-off looks like yet another buying opportunity in this perpetually unloved value stock.
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Lam Research is a top semi supplier that just raised its payout double-digits
Another great dividend grower is Lam Research (NASDAQ:LRCX), which is one of Micron’s suppliers, especially in the production of NAND flash chips. On its conference call with analysts, Micron’s management guided for increased capital expenditures in the next 12 months, with much of that going to NAND flash investment. Lam Research is a leader in, and gets half its revenue from, NAND flash etch and deposition machines, so that’s good news for Lam heading into next year.
Of course, Lam Research also had a banner year this year. Last quarter, revenue surged 48.5% year over…