Tech stocks are starting to perk up, after a couple of months of underperformance. Into year-end, the sector could see some big gains as fund managers chase high-beta stocks.
Another interesting area is dividend stocks which should continue to do well given the Fed’s low-rate policies. Tech dividend stocks are particularly attractive as they provide considerable upside along with a steady income.
Let’s take a look at the top tech dividend stocks to add to your portfolio as the new year approaches: Taiwan Semiconductor Manufacturing (TSM), Cisco System (CSCO), Corning Incorporated (GLW), and Applied Materials (AMAT).
Taiwan Semiconductor Manufacturing (TSM)
TSM certainly doesn’t have the highest dividend at 1.39% yet it is a better return than you’ll get at your local bank in a savings account. Furthermore, there is considerable upside for TSM as it is the world’s largest foundry for dedicated integrated circuits. TSM makes integrated circuits for customers with this advanced production processes.
This semiconductor powerhouse has “A” grades in the Buy & Hold Grade and Trade Grade POWR Rating components along with “B” grades in the Industry Rank and Peer Grade components. TSM is ranked first of nearly 90 publicly traded companies in the Semiconductor & Wireless Chip category.
With an improving outlook, the arrival of 5G phones, and renewed confidence amongst customers, the future looks bright for TSM. The company is the leader of all third-party chip fabricators, meaning it should continue ascending as 5G expands across the globe in the months ahead.
Cisco Systems (CSCO)
CSCO is a superstar networking company that deserves a place in nearly every investor’s portfolio. The CSCO dividend is an impressive 3.37%. Now that CSCO is bolstering its network security offerings, investors have all the more reason to pick up the stock. Network and data security is becoming that much more important and profitable as work shifts away from corporate offices to employee homes.
The POWR Ratings reveal CSCO has an “A” Trade Grade along with “B” grades in the Buy & Hold Peer and Industry Rank components. CSCO is ranked 12th of more than 50 publicly traded stocks in the Technology – Communication/Networking space. The top analysts are bullish on CSCO, setting an average price target of $47.69, indicating there is more than 11% upside.
CSCO has a forward P/E ratio of merely 13.46, indicating the stock is likely significantly undervalued at its current trading price of $42.44. The spike in network traffic will bode well for CSCO’s networking business in the years ahead. Though competition is intensifying, CSCO is pivoting slightly toward communications and cybersecurity as well as las software-as-a-service (SaaS) that is subscription-based. Though CSCO has sold off since it hit $48 in August, the stock is bouncing right back toward its summer high.
Corning Incorporated (GLW)
GLW doesn’t receive much attention from the media yet it is a solid performer, providing a 2.37% dividend. The glass company has relationships with Apple and several other notable companies, providing display technologies for these tech businesses.
All in all, display technologies comprise more than one-quarter of GLW sales. GLW glass is used in phones, notebooks, TVs, PC monitors, and plenty more.
Check out GLW’s POWR Ratings and you will be impressed: “A” grades in the Industry Rank, Buy & Hold Grade, and Trade Grade components. GLW is ranked third of nearly 40 publicly traded companies in the Industrial – Manufacturing space.
Applied Materials (AMAT)
A dividend of 1.06% might not seem very sexy yet AMAT has merit beyond its dividend. As one of the world’s top suppliers of equipment to make semiconductors, solar cells/modules, and LCDS, AMAT’s products are in demand. All in all, semiconductors comprise nearly two-thirds of AMAT sales.
The POWR Ratings reveal AMAT has “A” grades in the Peer Grade, Trade Grade, and Buy & Hold Grade components. AMAT is ranked 6th of 86 publicly traded companies in the Semiconductor & Wireless Chip category.
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TSM shares were trading at $100.24 per share on Wednesday morning, down $0.62 (-0.61%). Year-to-date, TSM has gained 75.56%, versus a 15.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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