Dividend stocks are known for their cash flow and stability. However, if you want a dividend stock that can beat the market, you may have to sacrifice a high yield. That’s not necessarily a bad thing, since a lower yield also results in less taxes.
The Nasdaq Composite is filled with great stocks, and it places a strong focus on tech stocks. That sector has rewarded many long-term investors, and that’s why all of the top-rated dividend stocks on this list are in the tech industry. Their yields may not blow you away, but their ability to beat the market over many years is undeniable.
Broadcom (AVGO)
The demand for artificial intelligence chips has propelled many stocks in the industry, including Broadcom (NASDAQ:AVGO | AVGO Price Prediction). The chipmaker is the 7th largest publicly traded corporation and has a market cap above $1 trillion. The stock’s 0.78% yield isn’t much, but its 850% return over the past five years should impress any investor.
Broadcom makes up for its low dividend with a long history of double-digit annualized dividend hikes. For instance, the company hiked its quarterly dividend from $0.53 per share to $0.59 per share last year, representing an 11.3% year-over-year increase.
The company’s financial growth suggests that it can continue to deliver double-digit dividend growth. For instance, Broadcom grew its revenue by 25% year-over-year in the first quarter. The tech giant brought in a record $14.9 billion during that quarter. Net income more than doubled year-over-year, and guidance suggests revenue will go up by 19% year-over-year in the second quarter. Rising profit margins, soaring revenue growth, and AI catalysts suggest Broadcom has a bright future.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) has the two largest social networks and a high-margin advertising business that has delighted long-term investors. The stock has more than tripled over the past five years and has a yield of roughly 0.30%.
Yes, that’s a low yield, but Meta Platforms just started its dividend program. The advertising giant is in a position to substantially raise its dividend over time. In the meantime, the company’s business continues to deliver for investors.
Revenue jumped by 22% year-over-year in the second quarter, and net income jumped by 36% year-over-year. Online ads are the foundation for Meta Platforms’ results, but more investments in artificial intelligence can eventually result in multiple revenue streams.
Alphabet (GOOGL)
Alphabet’s (NASDAQ:GOOGL) business model also revolves around online ads, but the company has done a better job of diversifying than Meta Platforms. Google Cloud has become a linchpin for growth, and Waymo is in its early stages of commercialization. Overall revenue increased by 14% year-over-year in the second quarter, while Cloud revenue surged by 31.7% year-over-year.
Alphabet continues to make big investments in artificial intelligence to boost its revenue streams and discover new opportunities. Shares are up by more than 160% over the past five years and come with a 0.43% yield. A 21.4 P/E ratio makes it more undervalued than the other Magnificent Seven stocks.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is the final tech giant on this list. It has a diversified business like Alphabet and is investing in artificial intelligence to maximize shareholder returns. Microsoft recently beat on the top and bottom lines for its Q4 FY25 results.
Shares have rallied by more than 150% over the past five years and come with a 0.65% yield. Cloud computing continues to be a main catalyst for future growth. Intelligent Cloud revenue was up by 26% year-over-year in a quarter that featured 18% year-over-year revenue growth across the company. Net income increased by 24% year-over-year, giving Microsoft plenty of room to boost its dividend payouts.
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