Three Tech Dividend Stocks to Buy in 2021 for Big Returns
For all the attention paid to the tech sector’s growth rate, only one thing matters: how the shares perform. Tech dividend stocks can help diversify your portfolio and earn along the away.
By that measure, dividends are one of the most powerful reasons to invest in tech stocks, because they can counteract the effects of inflation, and give you a chance to score some truly impressive gains along the way.
What is a dividend stock? A dividend stock is a company that pays dividends to investors. Dividends are a company’s earnings paid out to the shareholders. Dividends can be cash payments or stock dividends. Some of the best companies to invest in are the ones that pay dividends. Dividend stocks are very popular because they provide investors with income.
Tech dividend stocks are some of the best places to hold investments in 2021 if you seek to generate higher than broader market returns.
But why tech dividend stocks? Technology stocks have led the 2020 stock market rally to all-time highs despite massive losses at the beginning of the year due to pandemic.
Moreover, technology is the fastest-growing sector as 21.3% of the world’s fastest-growing companies belong to the technology, according to the study from Merchant Machine – which analyzed more than 1350 fastest-growing companies across the United States and Europe.
From an investor’s perspective, the companies have also been offering robust returns to investors. The price returns from the S&P 500 information technology sector stood around 34%, double than the 16% growth of the broader market index.
In addition to price appreciation, tech companies also offer hefty cash dividends to investors, thanks to strong revenue, earnings, and cash flow growth rates.
There are, indeed, plenty of dividend-paying companies in the tech sector. They usually pay a nice, safe dividend that will yield a solid return for the risk you take on. Finding or adding a few of these healthier tech stocks could help your overall portfolio.
Let’s take a look at some of the more prominent ones.
Microsoft – $MSFT
Microsoft Corporation (NASDAQ: MSFT), for instance, is among the best stock ideas for investors who seek to beat the broader market returns. Shares of Microsoft rose more than 30% in 2020 and the company paid a dividend of $2.24 per share. Besides the past year’s performance, the technology giant expects to generate double-digit growth in financial numbers in 2021, which bodes well for both share price gains and dividend growth.
Mircosoft still has great margins, a large institutional base of shareholders, and a great dividend. Even better, it is particularly bullish on its cloud computing business, which has been eating away at the margins of other big players in that market.
Apple – $AAPL
The world’s largest technology giant Apple (NASDAQ: AAPL) is second-best stock to consider in 2021. Shares of Apple rallied almost 70% in 2020 while it offers a quarterly dividend of $0.205 per share. Apple is one of the fastest-growing technology companies, thanks to its diversified business model and vast product offerings. Apple (AAPL) has a variety of products, but they all have one thing in common: they are all made with the highest level of quality.
Customers love Apple for a lot of reasons, but one thing they all agree on is that the products are of high quality. They have been able to do this because they produce a majority of technology themselves. This gives them immense control over their product. For example, Apple produces all of the chips for their phones and all of the chips in their computers, and with the recent development of the M1 chip are challenging Intel for the “speed crown”.
When you invest in Apple, you are investing in a company that knows exactly what their customer wants. The company now plans to enter electric vehicle markets in 2021.
Nvidia – $NVDA
The chipmaker Nvidia (NASDAQ: NVDA) is among the best technology stocks amid its robust share price performance and dividends. Its stock price grew more than 100% in 2020. The market analysts are expecting the chipmaker to expand its share price performance and dividend growth strategy in 2021.
Nvidia stock has been driven higher by its strong performance in the data centre, where its GPUs are playing an increasingly important role in AI and machine learning applications. Nvidia is also seeing continued demand for its graphics cards in PC gaming, which is the company’s biggest market by far.