After a careful search, the top five high-yield blue-chip dividend-paying tech stocks have been rooted out. These companies are all leaders in their field, supported by secular trends, producing solid results in 2023, expected to grow in 2024 and have exposure to AI. Their exposure to AI cannot be overestimated. These stocks make up the foundation of the long-term application of AI grounded in embedding AI technology. AI is a powerful tool but limited to the cloud; when AI moves to the edge of computing as it will, these companies will be in a prime position to benefit. And they are in a good position now.
Broadcom: You Pay a Lot But Get More in Return
Broadcom (NASDAQ: AVGO) is not exactly a cheap stock trading at 21X its earnings, but you get a lot for what you pay. Broadcom is firmly entrenched in the automotive, IT/communications, and consumer industries, among the leaders regarding long-term demand for AI products. Among Broadcom's top customers is Apple. There is a risk in that Apple plans to drop Broadcom and use an in-house design, but that design is yet to be seen, and Broadcom remains the leading manufacturer in this arena. Offsetting that is another deal with Apple that should help the company diversify to other customers. That deal is for 5G components.
Broadcom isn't the highest yield on this list, but it is solid at 2.0%. The company pays only 45% of its earnings, so there is ample room on the books for dividend increases. The company has already increased for 13 consecutive years, so there is a positive outlook for more. The CAGR is running at a high 24%, but the last was for 12%, so investors should expect a low-double to high-single-digit figure for the next increase. Analysts rate the stock a Moderate Buy and see it moving moderately higher.
Juniper Networks Connects the Internet With AI
Juniper Networks (NASDAQ: JNPR) is among the leading networking companies worldwide, already embedding AI into the Internet fabric. Its AIOPs use AI-powered machine learning and data science to analyze network systems to enhance efficiency and user experiences. The company has been growing and outperforming the Marketbeat.com consensus this year and should continue to do that in Q3. The analysts have been lowering their targets and have set the bar low.
Juniper pays a higher 3.1% yield, with shares trading near $28.50. The payout is reliably safe at less than 40% of earnings, with EPS growth expected next year. The company has an erratic history of distribution increases but has only increased the payment and is expected to do so again this year. Analysts rate the stock a Hold with a price target that is up YOY and 20% above the recent action.
Dell Will Embed AI Into Your Computers
Dell (NYSE: DELL) will eventually embed AI into your computers; until then, it has a deal with NVIDIA (NASDAQ: NVDA) to bring AI to enterprise customers, expected to bring top and bottom-line strength as soon as next year. The 2023 results have been weak but are offset by the growth outlook and dividend safety. The company pays only 20% of its earnings while the stock trades at 10X EPS, offering value and yield. Regarding growth, the analysts continue to expect double-digit EPS growth in 2024. Thirteen analysts rate Dell a Moderate Buy with a price target that lags the market but is trending higher.
IBM: A High-Yield Among High-Yielding Stocks
IBM (NYSE: IBM) has the highest yield in the group, with a payout worth 4.5%. The company has been increasing the payout for 30 consecutive years, so there is a high expectation for future increases. The payout ratio is on the high side, near 70%, but offset by an expectation for top and bottom-line growth in FQ3 and next year. Analysts rate this stock a Hold with a price target that assumes fair value near the middle of a trading range. The mitigating factor is that the price target is that the post-Q2 analysts' activity is bullish.
HP Inc.: Another Play On Long-Term Consumer Demand
HP Inc. (NYSE: HPQ) believes that AI is for all and is working to achieve the MLaaS business model and how to embed AI into computers. MLaaS is the Machine Learning as a Service model, and 1 will be a driving force for enterprise software companies. The Q3 results were on the weak side and have shares down 8% in premarket trading, opening an opportunity for new investors. Guidance was weak but sufficient to sustain the dividend outlook, which includes more than 3.4% in yield and a healthy outlook for distribution growth. Distribution growth may slow, but the low payout ratio and balance sheet improvements suggest the company could extend its 13 consecutive increases to Aristocrat-worthy levels.
