Investors typically do not expect tech stocks to pay dividends, and for good reason. For many years, very few tech stocks paid dividends to shareholders.

But this has changed greatly over the past decade, and now many blue-chip tech stocks pay dividends.

The benefit of buying tech stocks that pay dividends, is the potential for capital appreciation as well as income. This article will discuss 3 major tech stocks that have dividend yields above 3%.

HP Inc. (HPQ)

HP Inc. is a tech stock that has centered its business activities around two main segments: its product portfolio of printers, and its range of personal systems, which includes computers and mobile devices. HP reported its second quarter (fiscal 2024) results on May 30.

The company reported revenue of $12.8 billion for the quarter, which beat the analyst consensus estimate, and which was down 1% from the previous year’s quarter. Non-GAAP earnings-per-share totaled $0.82 during the second quarter, which was ahead of the analyst consensus estimate. HP Inc. saw its operating margin improve over the last year.

The company currently forecasts earnings-per-share in a range of $0.78 to $0.92 for the third quarter, which would mean a better result versus the most recent quarter at the midpoint of the guidance range. For the current year, HP forecasts earnings-per-share of around $3.45.

HPQ is a leader in the printing and personal computing markets, but these are areas that face challenges as consumers continue to shift to mobile devices. The adoption of 3D printing could help, as HP is already entrenched in this industry.

The dividend looks quite safe today, as it is easily covered by both profits and cash flows. HPQ pays out a large amount of cash to its owners via share repurchases, which have been a major growth driver for its earnings-per-share in the past.

HPQ has a secure dividend payout that currently yields 3.0%.

International Business Machines (IBM)

IBM is a global information technology company that provides integrated enterprise solutions for software, hardware, and services. IBM’s focus is running mission critical systems for large, multi-national customers and governments. It typically provides end-to-end solutions.

The company now has four business segments: Software, Consulting, Infrastructure, and Financing. IBM had annual revenue of ~$61.9B in 2023.

IBM reported mixed results for Q2 2024 on July 24th, 2024. Companywide revenue rose 4% in constant currencies, to $15.77 billion while diluted adjusted earnings per share climbed 11% to $2.43 from $2.18 on a year-over-year basis.

Software revenue increased 8% year-over-year, due to 6% growth in Hybrid Platform & Solutions and a 13% increase in Transaction Processing. Revenue was up 8% for RedHat, 16% for Automation, -2% for Data & AI, and +3% for Security. Consulting revenue was up 1.8% due to 6% rise in Business Transformation, +1% increase in Technology Consulting, and 3% decline in Application Operations. The book-to-bill ratio is healthy at more than 1.15X.

IBM’s competitive strength is its brand, entrenched customer relations and extensive patent portfolio. IBM is also the market leader in mainframe computers where it has 90% of the market and little competition. IBM is a different company after the Kyndryl spin off, but it should still be recession resistant. The nature of mission critical IT enterprise systems and software makes this unlikely to change in the near future.

IBM has increased its dividend for 30 years, making it a Dividend Aristocrat. Shares currently yield 3.3%.

Cisco Systems (CSCO)

Cisco Systems is the global leader in high performance computer networking systems. The company’s routers and switches allow networks around the world to connect to each other through the internet. Cisco also offers data center, cloud, and security products. Cisco employs more than 79,000 people and generates almost $54 billion in annual revenues.

On August 14th, 2024, Cisco reported results for the fourth quarter and fiscal year 2024 for the period ending July 27th, 2024. For the quarter, revenue fell 10.3% to $13.6 billion, but this was $100 million ahead of estimates. Adjusted earnings-per-share of $0.87 compared unfavorably to adjusted earnings-per-share of $1.14 in the prior year, but this was $0.02 more than expected.

For the year, revenue declined 6% to $53.8 billion while adjusted earnings-per-share of $3.73 compared to $3.89 in the prior fiscal year. This was the second quarter that included the company’s acquisition of Splunk, which contributed $4.3 billion to the annualized recurring revenue total of $29.6 billion. For the most recent quarter, Networking declined 28%, while Security surged 81%.

CSCO has increased its dividend for 14 consecutive years and the stock currently yields 3.0%.

Disclosure: No positions in any stocks mentioned

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Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.