Technology is one of the best performing sectors this year. This is a complete reversal from last year’s best-performing sector, but for the past decade and more, it was a time when investors could find the best growth stocks to buy.
In the year Since the end of the Great Recession in 2009, growth technology stocks have been a driving force on Wall Street as consumer demand for consumer electronics and related products and services has driven the sector to record highs. Although most of the profitability is driven AmazonGrowing more than 2,300% during that period, it didn’t even escape the industry’s downturn. Amazon’s stock is down 20% year to date, and the e-commerce giant isn’t offering the one thing other tech companies do to compensate for the lack of capital appreciation — dividends.
according to JP Morgan For asset management, companies that started and raised their fees between 1972 and 2012 returned an average of 9.5% over this 40-year period. Meanwhile, non-dividend stocks delivered a less-than-stellar annual return of 1.6 percent over the same period.
Over a three-year period, high-yielding securities outperformed low-yielding securities by two-thirds. It’s rare for a dividend to fully offset a stock’s decline, but the fact that a company continues to distribute a percentage of its profits to shareholders boosts investor confidence and prevents them from making rash decisions like short-selling. A shock of time.
This pair of dividend-paying tech stocks are ripe for buying in September.
The semiconductor industry has been crippled by global chip shortages as supply chain disruptions cut into chip supplies. Yet the chip maker Broadcom (AVGO -2.08%) It has a clear set of competitive advantages that allow it to hold up better than most. Although the stock is down 21% in 2022, it is one of the few semiconductor stocks that have delivered positive returns for investors over the past year.
As the primary supplier of wireless chips for smartphones, Broadcom should benefit from the ongoing upgrade cycle in smartphones in the coming years. The rollout of 5G networks marks the first improvement in download speeds in a decade and should continue to drive consumer demand.
Of more rapid value is its presence in the network and data center markets, both of which posted third-quarter sales growth of 30% and 70%, respectively (wireless was up 14% in the quarter).
Broadcom uses a significant amount of free cash flow, or cash left over after paying all bills, to grow the business and return value to shareholders. In the third quarter, free cash flow was $4.3 billion, or 51% of revenue, which helped pay a $1.7 billion dividend for the period. Broadcom’s annual dividend of $16.40 per share currently yields 3.1%.
Telecom giant AT&T (T -0.06%) Another benefit from 5G network development is investment. Now, after the spinoff of its Warner Media division, it is laser-focused on its telecom business again Warner Bros. Discoverycan target additional resources to its core growth vehicle.
AT&T was riding high earlier this year when Wall Street realized the thin telecom was the better stock, but a second-quarter earnings report that lowered free cash flow guidance by $2 billion caused the stock to disconnect. Investing in 5G networks costs a lot of money and a soft economy means consumers, hit hard by inflation, are delaying payments. That’s good news for investors who can still buy AT&T at its pre-rally price.
AT&T is still adding customers to its cell phone and fiber communications businesses, despite competition. Verizon It is losing customers.
The Telecom Premier Division will also remain intact. While it has cut its payout on AT&T in half by exiting its entertainment division, the $1.11 a share still yields 6.5% per year and is not at risk of further cuts. With great growth prospects still ahead of it, AT&T is the stock to buy this month.
John McKee, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Rich Dupree at AT&T and Warner Bros. Discovery, Inc. has positions in The Motley Fool has positions in and recommends Amazon. Motley Fool Broadcom Ltd, Verizon Communications and Warner Bros. Recommends Discovery, Inc. The Motley Fool has a disclosure policy.