CSCO: 3 Quality Tech Stocks To Watch for Reliable Dividends

Traditionally, the tech sector was associated with growth and innovation, but now it has evolved as the companies in this sector offer consistent dividends. As the tech landscape matures, firms with robust cash flows are increasingly prioritizing shareholder returns through dividends.

Below, I have highlighted three fundamentally stable tech stocks: Cisco Systems, Inc. (CSCO), International Business Machines Corporation (IBM), and Texas Instruments Incorporated (TXN), offering a dividend yield of more than 2.5%.

Cloud computing and software service providers have emerged as key players in this space. These firms benefited from accelerated digital transformation trends. With stabilizing interest rates, evolving market dynamics, and an incoming Trump administration, the 2025 tech investment environment promises fewer speculative frenzies and more focused, strategic activity.

As the demand for data-intensive technologies surges, investments in critical infrastructure are aligning with broader trends in AI, cloud computing, and connectivity. The U.S. IT services market is anticipated to reach $695.6 billion by 2030, growing at a CAGR of 7.9%. Also, global IT spending will expand by 8.3%, reaching $5.44 trillion this year, driven by rising demand for cloud solutions, cybersecurity, automation, and data management.

These tech stocks combine the sector’s dynamic potential with the stability of regular income, making them attractive for both growth and income-focused investors.

With these favorable trends in mind, let’s take a closer look at the quality tech stocks:

Cisco Systems, Inc. (CSCO)

CSCO designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry internationally. It integrates product portfolios across networking, security, collaboration, applications, and cloud.

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On November 18, CSCO announced it signed a Whole Portfolio Agreement (WPA) with MGM Resorts International, a global gaming and entertainment company, to empower MGM Resorts next-generation guest experiences. In this agreement, MGM Resorts will have access to CSCO’s software portfolio and Customer Experience (CX) services for 5.5 years.

In the same month, demonstrating its commitment to returning value to shareholders, the company declared the 52nd consecutive quarterly dividend of $0.40 per common share. This dividend will be paid on January 22, 2025.

CSCO pays an annual dividend of $1.60, which translates to a yield of 2.72% at the current share price. Its four-year average dividend yield is 3.02%. Moreover, its dividend payouts have increased at a CAGR of 2.7% over the past five years.

In terms of the trailing-12-month net income margin, CSCO’s 17.73% is 375.3% higher than the 3.73% industry average. Similarly, its 24.68% trailing-12-month levered FCF margin is 118.5% higher than the industry average of 11.29%. Also, its trailing-12-month ROCE of 20.76% compares to the industry average of 4.56%.

During the first quarter of 2025, which ended on October 26, CSCO’s total revenues were $13.84 billion, while its services’ revenue amounted to $3.73 billion, representing an increase of 5.6% from the last year. Moreover, the company’s net income for the quarter came in at $2.71 billion and $0.68 per share.

The consensus revenue estimate of $13.87 billion for the fiscal second quarter (ending January 2025) represents an 8.4% increase year-over-year. The consensus EPS estimate of $0.91 for the same quarter indicates a 4.3% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue estimates and EPS in each of the trailing four quarters.

Over the past six months, the stock has surged 24.9%, closing the last trading session at $58.86.

CSCO’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

CSCO has a B grade for Momentum, Stability, and Quality. It is ranked #16 out of 45 stocks in the B-rated Technology – Communication/Networking industry. Click here to see the additional ratings for CSCO (Growth, Value, and Sentiment).

International Business Machines Corporation (IBM)

IBM is engaged in addressing the hybrid cloud and Artificial Intelligence (AI) opportunity with a platform-centric approach focused on providing client value through a combination of technology and business expertise. It operates through four segments: Software; Consulting; Infrastructure; and Financing.

On December 10, the company paid a quarterly dividend of $1.67 per share. With 25 years of consecutive dividend growth, IBM pays an annual dividend of $6.68, which translates to a yield of 3% at the current share price. Its four-year average dividend yield is 4.46%. Also, the company’s dividend payouts have increased at a CAGR of 1.8% over the past three years.

In the same month, IBM and Janes, a recognized defense intelligence company, joined hands to help national security and integrate open-source defense and security intelligence data into a trusted AI and data platform. This collaboration enables defense leaders’ access by integrating the IBM watsonx AI and data platform utilizing an IBM Granite model with a Retrieval-Augmented Generation (RAG) pattern with Janes data.

The stock’s trailing-12-month ROTA of 4.76% is 142.2% higher than the industry average of 1.97%. Similarly, its 26.82% trailing-12-month ROCE is 488.2% above the industry average of 4.56%. Also, its trailing-12-month EBIT margin of 11.58% compares favorably to the industry average of 5.38%.

IBM’s revenue for the third quarter (ended September 30, 2024) increased marginally year-over-year to $14.97 billion. It reported a gross profit of $8.42 billion, indicating a 4.9% growth from the year-ago value. Its adjusted EBITDA for the quarter rose 8.6% year-over-year to $3.8 billion. In addition, the company’s non-GAAP income from continuing operations increased 6.1% year-over-year to $2.16 billion, while its non-GAAP EPS from continuing operations grew 4.5% from the prior year’s quarter to $2.30.

Analysts expect IBM’s revenue for the fiscal year (ended December 2024) to grow marginally year-over-year to $62.82 billion, while its EPS for the same period is expected to increase 6.2% year-over-year to $10.21.

IBM shares have surged 39.1% over the past year and 26.7% over the past six months to close the last trading session at $222.65.

IBM’s stance is apparent in its POWR Ratings. The stock has a B grade for Momentum and Quality.

Among the 78 stocks in the Technology – Services industry, it is ranked #38. Click here to see the additional IBM ratings (Growth, Value, Stability, and Sentiment).

Texas Instruments Incorporated (TXN)

TXN is a global semiconductor company that designs, manufactures, and sells semiconductors to electronics designers and manufacturers. The company operates in two segments: Analog and Embedded Processing.

On December 20, TXN received an award agreement of up to $1.6 billion from the U.S. Department of Commerce in CHIPS Act funding to support three new 300mm semiconductor wafer fabs under construction in Texas and Utah. This award will help TXN provide a geopolitically dependable supply of essential analog and embedded processing semiconductors.

On November 12, buoyed by strong financial performance, the company paid its shareholders a quarterly dividend of $1.36 per share. TXN pays an annual dividend of $5.44, which translates to a yield of 2.86% at the current share price. Its four-year average dividend yield is 2.62%. Moreover, the company’s dividend payouts have increased at a CAGR of 10.4% over the past five years.

TXN’s trailing-12-month ROCE and ROTA of 29.15% and 14.06% are 539.3% and 614.9% higher than their respective industry averages of 4.56% and 1.97%. Likewise, its trailing-12-month net income margin of 31.6% is 747.2% above the industry average of 3.73%.

For the fiscal 2024 third quarter that ended on September 30, 2024, TXN’s total revenue was $4.15 billion. The company’s net income amounted to $1.36 billion, and its EPS stood at $1.47. The company’s cash and cash equivalents and total assets came in at $2.58 billion and $35.32 billion as of September 30, 2024.

Street expects TXN’s revenue for the fiscal first quarter (ending March 2025) to increase 5.9% year-over-year to $3.88 billion. Moreover, its EPS estimate of $1.22 for the same period indicates a marginal year-over-year growth. In addition, it surpassed the consensus revenue estimates in three of the trailing four quarters, which is promising.

The stock has gained 14.3% over the past year to close the last trading session at $190.51.

TXN’s fundamentals are reflected in its POWR Ratings. The stock has a B grade for Sentiment and Quality. It is ranked #43 out of 90 stocks in the Semiconductor & Wireless Chip industry.

Beyond what is stated above, we’ve also rated TXN for Growth, Value, Momentum, and Stability. Get all TXN’s ratings here.

What To Do Next?

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CSCO shares were trading at $58.74 per share on Monday afternoon, down $0.12 (-0.20%). Year-to-date, CSCO has declined -0.10%, versus a 1.55% rise in the benchmark S&P 500 index during the same period.