The Magnificent Seven? tired.
Dividend 6? wired.
Ordinary investors love chipmakers and AI stocks.They are hope They can buy them higher and sell them higher.
Are you a contrarian income investor like us? We focus on companies such as: support AI hype. “Pick and shovel” provider. “Dividend Six” uses AI to make payments $26,000 to $41,500 Just the dividends on the $500,000 stock.
So let's say “The Magnificent Seven.” This term was coined by his BAC Michael Hartnett of Bank of America (inspired by the classic Sturgess Western) to describe the major technology names in the market.
What about that stock? Microsoft MSFT (MSFT), Apple AAPL (AAPL)parent of facebook Meta Platform FB (META), Amazon.com (AMZN),GoogleGOOG parent Alphabet (GOOGL), Nvidia (NVDA) and Tesla TSLA (TSLA).
However, the Magnificent 7 has become a little too popular these days. Check out Google Trends, which measures vanilla excitement in real time.
Google Trends Magnificent 7
Is there another problem with these popular good chips? Most of them aren't pay.
They may be a good company, but forget about the revenue. Three companies don't pay a penny in dividends, while four companies offer a meager yield.
Enter Dividend Six, a six-pack of undervalued tech stocks with dividend yields between 5.2% and 8.3%. That's not a typo.
Is it worth having in your retirement fridge? Let's break it down into six parts.
Xerox XRX (XRX)
Dividend yield: 5.2%
With a yield of 5% or more, Xerox (XRX) That's nearly seven times the yield you'd expect from the tech sector, and an unusually erratic return for the notoriously erratic group of stocks.
But are we seeing growth?
On the surface, Xerox is not very good. The company is pivoting to digital document services, but at its core it's a printing company. And printers are simply disappearing, as digital technology replaces paper documents and many white-collar companies partially or completely retreat from physical office space. Perhaps no other business has lost so much to his three little letters: WFH.
However, investment deals are more uncertain than expected.
Xerox is focused on both reducing costs and optimizing free cash flow, much of which it hopes to continue returning to investors through quarterly dividends. There are also bright spots from a profitability perspective. Revenues are expected to improve by about 15% to 16% this year and next. Additionally, XRX stock is extremely cheap, trading at just six times next year's earnings estimates.
But the actual growth It remains evasive. In the company's most recent quarter, total sales fell by 9%. This was primarily due to a hemorrhage in equipment sales (-17%). XRX may be pivoting to software, but it needs a push. About 80% of its revenue is still generated by its printing business.
It's also hard to get excited about the dividend. While the dividend is certainly well above average, it's stagnant and loses momentum to inflation every year.
Opera (OPRA)
Dividend yield: 7.1%
growth is not an issue Opera (OPRA)– Norwegian browser provider. Key products include the Opera series of mobile browsers, Opera News, Apex Football, and Opera Ads (an online advertising platform). It also owns the 2D game development platform GameMaker Studio. Although you may not be familiar with it, it is well known around the world, with operations in the UK, France, Germany, Ireland, Nigeria and Spain, among others.
Browsers and search portals have quickly become popular venues for consumer AI applications.like Microsoft (MSFT) and Alphabet (GOOGL) Here in the US, Google and Opera are implementing AI capabilities into their browsers and other software. Today, Aria (Opera's browser AI) and ChatGPT are both fully integrated with the Opera browser and serve customers in over 180 countries.
Opera has been around since 1995, but is a relatively recent tech IPO, going public in 2018. Growth has been impressive so far, with the company's most recent annual revenue up 33% year-over-year and nine consecutive quarters of growth. Sales he will expand by more than 20%. And this quarter's profits are set to explode by 244%. Of particular interest right now are changes to the European Commission's requirements that force Apple to allow users to choose between multiple default browsers. This could be a tailwind for new iOS users for Opera, which is more profitable than Android users.
But Opera doesn't put all of those big profits into its business. In June, it announced a generous new semi-annual dividend of 40 cents per share, which translates to a yield of more than 7%. Like many new dividend programs, Opera may face questions about how long it can maintain its incredible growth pace. In fact, 2024 sales and bottom line expectations are much more subdued. Still, this little-known technology effort is worth paying attention to.
Opera's dividend creates a trade-off. largely Current high-dividend tech stocks (but not all): These are primarily based overseas, so they tend to pay more but less frequently, and the dividends themselves are based on profits. It may change. I'm having a problem when trying to set up an income calendar.
Consider this quartet of high-yielding Taiwanese semiconductor stocks.
- ChipMOS technology (IMOS, yield 5.5%): ChipMOS, based in Taiwan, is a large semiconductor service company. In addition to back-end testing for high-density memory chips, mixed-signal semiconductors, and LCD drivers, we also provide package assembly services. Its financial position is good, with slightly more debt than cash and short-term investments. And while the company has been paying an annual dividend for years, that dividend has fluctuated wildly, from $2.88 per share in 2022 to $1.50 per share in 2023. Still, this currently equates to a 5% yield.
- ASE Technology (ASX, 6.1% yield): ASE Technology is also an outsourced semiconductor assembly and test (OSAT) provider, offering assembly and front-end testing on four continents. The debt-to-cash ratio isn't as good as his ChipMOS, but it's hardly a problem. However, the dividend situation is good. Dividends are only paid annually, but annual dividends have had a fairly clear upward trend over the years. And the current dividend is 57.1 cents, more than quadrupling his 2020 payout.
- United Microelectronics (UMC, 7.4% yield): UMC has the distinction of being Taiwan's first semiconductor company, and is a wafer foundry established in 1980 by Taiwan's Institute of Industrial Technology. Like service companies, foundries do not influence the technological advancements of any particular chip manufacturer; rather, they are a play on the growth of the overall chip manufacturing market. So as long as technologies like AI and machine learning require more processing power, companies like UMC stand to benefit. UMC's balance sheet is rock solid and, like the ASX, its annual dividend has surged in recent years.
- Himax Technologies (HIMX, yield 8.3%): Himax is a fabless semiconductor company. This means that while the chips are being designed, production takes place elsewhere. The Taiwan-based chip company is deeply involved in 3D sensing technology as well as display drivers (its products are used in applications such as televisions, laptops, smartphones, digital cameras, and virtual reality devices). .compared to other chip manufacturers Nvidia (NVDA) and Advanced Micro Devices AMD (AMD), its product usage is pretty mediocre, but there are still some growth opportunities here. Himax has only paid annual dividends for the past three years, but it has jumped significantly from about 27 cents in 2021 to $1.25 in 2022 and 48 cents in 2023. Still, this is an outrageous yield for any stock. Solo technology play.
Brett Owens is a top investment strategist in the United States. contrarian outlook. For more great income ideas, get his latest special report for free. Early Retirement Portfolio: Earn huge dividends every month, forever.
Disclosure: None
