Investors that missed the huge ascent of mega-cap tech stocks like Amazon and Apple are probably wondering if now is the time to jump in and buy after the recent big sell-off. The reality is that while the huge market leaders will probably continue to dominate in specific silos, many are overbought and could be the most susceptible to a continued big correction, despite Wednesday’s rebound. With the election less than two months away, and the likelihood of increasing volatility, those looking to own tech may want to focus on the dividend leaders in the sector.
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We screened our 24/7 Wall St. research database looking for technology stocks that also pay sizable dividends and are rated Buy at major Wall Street firms. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Broadcom
This stock has rallied smartly off the lows and offers big upside potential. Broadcom Inc. (NASDAQ: AVGO | AVGO Price Prediction) has an extensive semiconductor product portfolio that addresses applications within the wired infrastructure, wireless communications, enterprise storage and industrial end markets.
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Applications for Broadcom’s products in its end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems and displays.
Top Wall Street analysts like Broadcom’s leadership in the mobile, data center and broadband markets, and especially in the radio frequency (RF) arena. Many on Wall Street see a cyclical rebound in industrial and communications demand on the horizon.
BofA Securities is very positive but did note the company’s large 15% exposure to iPhones. The firm said this when the company reported last week:
Fiscal third quarter beat and fiscal fourth quarter ahead on 5G iPhone (wireless 50%+ quarter-over-quarter) & sustained cloud/networking (better than expected). We like the company’s diverse growth well positioned to benefit from trends of cloud/5G; 53% Free-cash-flow margin with room for a 10% dividend boost.
Broadcom stock investors receive a 3.71% dividend. BofA Securities analysts have raised the price target to a massive $450. The Wall Street consensus target is $397.86, and shares closed trading on Wednesday at $360.03.
Cisco
This is a mega-cap tech leader for more conservative accounts to consider. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.
It provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
Cisco’s cybersecurity products give clients the scope, scale and capabilities to keep up with the complexity and volume of threats. Putting security above everything helps corporations innovate while keeping their assets safe.
The company reported in-line revenues for the quarter, but the disappointing guidance caused some sellers to come in. Many on Wall Street remain positive as 5G, 400G, optical and WiFi 6 are expected to drive 2021 growth.
Shareholders receive a 3.60% dividend. The $52 BofA Securities target price compares with the posted consensus target of $49.17. Cisco Systems stock closed at $40.13 on Wednesday.
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Cogent Communications
This off-the-radar idea could hold the most value of all the dividend tech companies we found. Cogent Communications Holdings Inc. (NASDAQ: CCOI) provides high-speed internet access and private network and data center colocation space services, primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in North America, Europe, Asia, Australia and Brazil.
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The company offers on-net internet access and private network services to law firms, financial services firms, advertising and marketing firms, other professional services businesses, other internet service providers, telephone companies, cable television companies, web hosting companies, content delivery network companies and commercial content and application service providers. It also provides on-net services in carrier-neutral data centers.
Here, investors receive a 4.33% dividend. Citigroup has an $89 price objective, while the consensus target price is $75. The final Cogent Communications stock trade on Wednesday came in at $65.79.
Corning
This company continues to be a huge player in the fiber optic world. Corning Inc. (NYSE: GLW) is a technology pioneer that manufactures LCD glass for flat-panel displays for multiple product lines.
Telecommunications (30% of sales) produces optical fiber and cable, component hardware and equipment, and photonic components for the telecommunications, CATV and networking industry. In addition, the company’s Environmental Technologies division (12% of sales) produces specialized glass, glass ceramic and polymer-based products for the automotive industry. The future remains solid for this diversified digital world leader.
Shareholders receive a 2.77% dividend. The BofA Securities $34 price target compares to the $26.82 consensus target. Corning stock was last seen trading at $33.07 per share.
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Juniper Networks
This solid network stock has been on a long roller-coaster ride for investors over the past two years. Juniper Networks Inc. (NYSE: JNPR) designs, develops and sells network products and services worldwide. The company offers various routing products, such as ACX series universal access routers to deploy new high-bandwidth services; MX series Ethernet routers that function as a universal edge platform; PTX series packet transport routers; cloud customer premises equipment; and NorthStar controllers.
The company also provides switching products, including EX series Ethernet switches to address the access, aggregation and core layer switching requirements of micro branch, branch office, and campus and data center environments, as well as QFX series of core, spine and top-of-rack data center switches. In addition, the company offers security products comprising SRX series services gateways for the data centers; Branch SRX family that provides integrated firewall capabilities; vSRX Virtual Firewall that delivers various features of physical firewalls; and Sky Advanced Threat Prevention, a cloud-based service for static and dynamic analysis.
Juniper Networks reported in-line second-quarter results despite COVID-19 creating supply chain constraints and weighing on enterprise demand. Revenues declined 1.5% year over year, with all customer verticals and product segments either flat or down. However, there are strong order trends in place that could improve with a strengthening economy.
Shareholders receive 3.51% dividend. JPMorgan has set a $28 price target on Juniper Networks stock. The posted consensus target is $25.00, and Wednesday’s closing price was $23.23 a share.
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These five stocks have solid upside to the various firms’ price targets and also offer investors perhaps a more comfortable entry point than some technology momentum plays. There is a good chance the market could stay very volatile, and these could be good vehicles for a continued sideways to downwards move. For investors with longer time horizons looking to the sector, these dividend-paying giants all make sense now.
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