Dividend investors are often attracted to stocks with the highest yields. But the stock's yield may look attractive only because its underlying business is addressing other issues. The company may also struggle to generate enough earnings or free cash flow (FCF) growth to support its dividend payments.
So instead of simply focusing on the highest-yielding dividend stocks, investors should look for companies that offer a balanced blend of value, growth, and earnings. I believe these three blue-chip tech stocks tick all the right boxes. Dell Technologies (NYSE:Dell), broadcom (NASDAQ:AVGO)and oracle (NYSE:ORCL).
See why these three high-dividend tech stocks are buys in April.
1. Dell Technologies
Dell became a public company again in December 2018, nearly six years after founder and CEO Michael Dell took the company private. It then spun off an 81% stake in cloud software giant VMware in 2021, and now derives most of its revenue from PC, server, and data storage products.
In fiscal year 2024 (ending in February of this year), Dell's revenue and adjusted EPS declined 14% and 6%, respectively. The company's PC business remained weak in the post-pandemic market, but weak sales of data storage products offset strong server sales.
While this slowdown was disappointing, Dell expects a “return to growth” in fiscal 2025 as the PC market stabilizes, sales of AI-optimized servers increase, and the storage solutions business catches up with the growing server market. ” I predict. Analysts expect full-year sales and adjusted EPS to both rise about 6%.
Over the long term, Dell aims to increase annual revenue by approximately 3% to 4%, increase annual adjusted EPS by at least 8%, and return at least 80% of adjusted FCF to investors through share repurchases and dividends. We are aiming for The current dividend yield is 1.6%, the payout ratio is low at 34%, and the stock is still cheap at 17 times forward earnings.
2.Broadcom
Broadcom, formerly known as Avago Technologies until it acquired the original Broadcom in 2016, is one of the world's largest chipmakers. The company also owns an infrastructure software business, and last November he expanded that small division to about half of his sales with his $69 billion acquisition of VMware.
Broadcom's revenue and adjusted EPS grew 8% and 12%, respectively, in fiscal 2023 (ending last October). Most of that growth was driven by the expansion of the AI market, with sales of data center and networking chips increasing significantly. The company expects AI chips to account for 35% of total semiconductor revenue in fiscal 2024.
Broadcom also signed a new “multi-billion dollar deal” to sell 5G radio frequency chips and other wireless connectivity components. apple Last May. The deal shows that the company remains one of its top customers, even as Apple develops its own first-party chips to reduce dependence on third-party chip makers.
Analysts expect Broadcom's integration of VMware to increase revenue and adjusted EPS by 41% and 11%, respectively, in fiscal 2024. Although the company's sales growth will likely slow after completing a major acquisition, the stock still looks reasonably valued at 28 times forward earnings. It also pays a decent future yield of 1.6%, with a manageable payout ratio of 71%.
3. Oracle
Oracle is one of the world's largest database software companies. Over the past decade, we have expanded our ecosystem by converting many of our on-site applications to cloud-based services and adding more enterprise resource planning (ERP) and cloud infrastructure services. This cloud-driven transformation has enabled Oracle to remain relevant and continue to grow revenue. It also repatriated most of its overseas cash and repurchased nearly 40% of its stock over the past decade.
In fiscal year 2023 (ending last May), Oracle's revenue increased 18% (7% organically) and adjusted EPS increased 4%. Analysts expect fiscal 2024 revenue and adjusted EPS to increase 7% and 9%, respectively.
Oracle plans to continue expanding its cloud services division, which accounted for 38% of revenue last quarter, to offset slower growth in its on-premises, licensing and support divisions. We also expect increased usage of back-office databases and ERP applications, the generation of cloud infrastructure platforms to expand AI capabilities, and a new AI infrastructure agreement with the United States. Nvidia Promote short-term growth.
Oracle is likely to benefit from the expansion of the AI market, but at a forward P/E of 19, the stock still looks cheap. Additionally, the future yield is 1.3% and the payout ratio is low at 42%, so there is plenty of room for future dividend increases.
Should you invest $1,000 in Dell Technologies right now?
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Leo Sun has a position at Apple. The Motley Fool has positions in and recommends Apple, Nvidia, and Oracle. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
3 High Dividend Tech Stocks to Buy in April Originally published by The Motley Fool
