The technology sector, a powerhouse of market dividends, is growing at an unmatched pace, outshining other industries. From communications to software and outsourcing, tech companies are boosting dividends at rates well above the market average.

Hence, for investors pursuing steady income, overlooked dividend payers like Cisco Systems, Inc. (CSCO), Intuit Inc. (INTU), and Automatic Data Processing, Inc. (ADP) deserve attention.

Tech dividend growers stand out with higher returns on equity and lower debt levels than broader market indices. With stable earnings, strong balance sheets, and low debt, many tech firms showcase maturity and reliability. The information technology market, having experienced robust growth, is projected to reach $9.61 trillion by 2025, growing at a CAGR of 7.7%.

In today’s economic landscape, dividend stocks offer an attractive mix of consistent income, growth potential, and downside protection, making them appealing to both conservative and growth-oriented investors. With the Fed expected to maintain steady interest rates in January 2025 and potentially resume cuts by March, the environment could favor dividend-paying stocks, as lower rates typically boost their appeal.

Considering these conducive trends, let’s analyze the fundamental aspects of the three tech dividend picks.

Cisco Systems, Inc. (CSCO)

CSCO designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China.

On January 15, 2025, CSCO announced AI Defense, an innovative solution to secure AI applications against threats like data leakage and misuse. Leveraging CSCO’s network visibility, AI Defense ensures safe development, deployment, and use of AI tools, addressing security gaps in multi-cloud, multi-model environments.

On November 18, 2024, CSCO and MGM Resorts announced a 5.5-year Whole Portfolio Agreement, granting MGM access to CSCO’s software and services to enhance guest experiences and enable future technologies like machine learning and location services across its properties.

In terms of the trailing-12-month Return on Total Assets, CSCO’s 7.62% is 286.5% higher than the 1.97% industry average. Its 26.94% trailing-12-month EBITDA margin is 161.8% higher than the 10.29% industry average. Also, its 11.01% trailing-12-month Return on Total Capital is 247.8% higher than the 3.17% industry average.

CSCO has paid dividends for 13 consecutive years. Its annual dividend is $1.60, which translates to a yield of 2.66% at the current share price. Its four-year average dividend yield is 3.01%. Moreover, the company’s dividend payouts have increased at a CAGR of 2.6% over the past three years.

During the first quarter which ended on October 26, CSCO’s total revenues were $13.84 billion. Its services revenue amounted to $3.73 billion, up 5.6% from last year. Moreover, the company’s non-GAAP net income for the quarter came in at $3.67 billion, or $0.91 per share.

Street expects CSCO’s EPS for the quarter ending January 31, 2025, to increase 4.3% year-over-year to $0.91. Its revenue for the same quarter is expected to rise 8.4% year-over-year to $13.87 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 26% to close the last trading session at $60.23.

CSCO’s POWR Ratings reflect strong prospects. It has an overall rating of B, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #14 out of 46 stocks in the B-rated Technology – Communication/Networking industry. It has a B grade for Momentum, Stability, and Quality. Click here to see CSCO’s ratings for Growth, Value, and Sentiment.

Intuit Inc. (INTU)

INTU provides financial management and compliance products and services for consumers, small businesses, self-employed, and accounting professionals in the United States, Canada, and internationally. The company operates in four segments: Small Business & Self-Employed, Consumer, Credit Karma, and ProTax.

On January 8, 2025, INTU announced new TurboTax offerings for the 2024 tax season, including a free federal and state mobile app and a “5 Days Early Refund” guarantee, providing faster and affordable access to tax refunds. TurboTax also continues to offer no-fee refund advances for immediate funds upon IRS acceptance.

On December 12, 2024, INTU announced a multi-year partnership with the Professional Women’s Hockey League, naming QuickBooks as its Official Accounting Software Partner. The collaboration aims to support Canadian women in business and promote equality through entrepreneurship and sports.

In terms of the trailing-12-month levered FCF margin, INTU’s 27.33% is 140.4% higher than the 11.37% industry average. Its 17.59% trailing-12-month net income margin is 358.6% higher than the 3.84% industry average. Likewise, the stock’s 23.06% trailing-12-month EBIT margin is 330.8% higher than the 5.35% industry average.

INTU pays an annual dividend of $4.16, which translates to a yield of 0.69% at the current share price. Its four-year average dividend yield is 0.58%. In addition, the company’s dividend payouts have increased at a CAGR of 15.2% over the past three years. INTU has paid dividends for the past 13 years.

INTU’s net revenues for the first quarter ended October 31, 2024, increased 10.2% year-over-year to $3.28 billion. Its non-GAAP operating income was $953 million. For the same period, the company’s non-GAAP net income came in at $709 million, or $2.50 per share, both up marginally from the prior year’s quarter.

For the quarter ending January 31, 2024, INTU’s revenue is expected to increase 13% year-over-year to $3.83 billion. Its EPS for the quarter ending April 30, 2024, is expected to grow 16.9% year-over-year to $11.55. INTU surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has declined marginally to close the last trading session at $604.13.

INTU’s robust outlook is reflected in its POWR Ratings. It has an overall rating of B, which translates to a Strong Buy in our proprietary rating system.

INTU has a B grade for Quality. Within the B-rated Software – Application industry, it is ranked #40 out of 124 stocks. To see INTU’s ratings for Growth, Value, Momentum, Stability, and Sentiment ratings, click here.

Automatic Data Processing, Inc. (ADP)

ADP engages in the provision of cloud-based human capital management (HCM) solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO).

On January 15, 2025, ADP announced a regular quarterly dividend of $1.54 per share, payable on April 1, 2025, to shareholders of record as of March 14, 2025.

In terms of the trailing-12-month Return on Common Equity, ADP’s 87.26% is 546.2% higher than the 13.50% industry average. Its 13.37% trailing-12-month levered FCF margin is 93.9% higher than the 6.89% industry average. Also, its 48.11% trailing-12-month gross profit margin is 52% higher than the industry average of 31.65%.

ADP’s annualized dividend of $6.16 per share translates to a dividend yield of 2.08% on the current share price. Its four-year average yield is 1.95%. Its dividend payouts have increased at a CAGR of 14.4% over the past three years. Also, ADP has paid dividends for 49 consecutive years.

For the first quarter ended September 30, 2024, ADP’s total revenues increased 7.1% year-over-year to $4.83 billion. Its adjusted net earnings were $956.10 million, up 11.2% from the prior year’s quarter. Similarly, its adjusted EPS grew 12% year-over-year to $2.33.

Analysts expect ADP’s EPS and revenue for the quarter ended December 31, 2025, to increase 8.2% and 6.5% year-over-year to $2.30 and $4.97 billion, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters. ADP’s stock has gained 25.8% over the past year to close the last trading session at $296.18.

ADP’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Strong Buy in our proprietary rating system.

It has a B grade for Stability and Quality. Within the B-rated Outsourcing – Business Services industry, it is ranked #15 out of 38 stocks. To access ADP’s grades for Growth, Value, Momentum, and Sentiment, click here.

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CSCO shares were trading at $60.23 per share on Monday afternoon, up $0.41 (+0.69%). Year-to-date, CSCO has gained 2.43%, versus a 1.96% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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