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The tech sector is often stingy when it comes to dividends. Many tech companies are early in their growth cycle and need to retain revenue to fund expansion. Meanwhile, those who generate more cash tend to keep it in their balance sheets or use it to buy stocks.
However, few Technology stocks They have quietly emerged as the best dividend growth stocks. Intuit (INTU -1.12%) And Skyworks solutions (SWKS -0.72%) These are the two that investors don’t want to miss. They have increased their fees rapidly in recent years, and that should continue going forward.
Small but growing fast
It’s easy to overlook Intuit’s division. The financial technology platform offers little Dividends That’s well below 0.6%. S&P 5001.5% interest rate.
However, what Intuit lacks in productivity it more than makes up for in growth. of Fintech company In the year It has increased its fees every year since its inception in 2011. The company recently reported a 15% quarterly increase to investors. Bonus payment About 0.78 dollars per share. Intuit has increased its dividend by an impressive 420% since it started paying.
Intuit should be able to continue growing its dividend at a healthy clip in the coming years. The company generates a large amount of cash to support the payment. Intuit generated nearly $3.9 billion in net cash provided by operating activities in fiscal 2022 and paid $774 million in dividends. Meanwhile, the company has a strong balance sheet with $6.9 billion in debt and $3.3 billion in cash. This will allow the company to invest in further expansion and buy back the stock. The company has made several needle-moving acquisitions (MailChimp and Credit Karma) in recent years to accelerate revenue growth through 2025, which should allow Intuit to continue growing its dividend at an attractive pace in the coming years.
The increasing dividend
Skyworks Solutions offers an even more attractive dividend with a current high yield of 2.4 percent. The chip maker recently gave investors an 11% boost, bringing its quarterly payout to $0.62 per share. In the year Since its launch in 2014, SkyWork has grown its dividend every year, growing by an impressive 463 percent.
The technology company supports its dividend with a strong financial profile. Skyworks As of July 1, it had $622.2 million in cash and marketable securities against $2.2 billion in debt. Meanwhile, in the first nine months of the fiscal year, operating activities generated $1.2 billion in net cash, which more than covered dividend expense of $237.7 million. This allowed it to retain cash to fund expansion and buy back more of its stock.
Skyworks sees a lot of growth ahead, driven by a number of technology trends, including mobile data expansion, the Internet of Things, 5G, AI and other trends. Those driving forces should enable the company to grow its earnings exponentially while generating more cash. It has a long-term goal of generating a 30% free cash flow margin. This will provide additional cash to support continued dividend growth.
Tech-powered dividend growth
Tech stocks aren’t known for paying dividends, and it can be easily overlooked that some tech stocks have high dividend records. That’s the case with Intuit and Skyworks Solutions, which have rapidly grown their divisions over the years. These upward trends should continue going forward, making them attractive options for investors looking for growth and income.
Matthew DiLallo has jobs at Skyworks Solutions. He has spots in the Motley Fool and recommends Intuit. The Motley Fool recommends Skyworks Solutions. The Motley Fool has a disclosure policy.
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