3 Tech Stocks That Pay Juicier Dividends Than Apple
Apple (NASDAQ: AAPL) started up its current dividend program back in 2012 after years of refusing to give back even a single cent to its shareholders. Since then, the company has dutifully allocated a meaningful portion of its free cash flow to its dividend program and has raised its dividend payouts per share each year.
While Apple is committed to its dividend program, the reality is that Apple isn't the highest-yielding stock out there. As of this writing, the company's dividend yield stands at 1.54%. That's a nontrivial amount, certainly, and the company is sure to raise it when it updates investors on its capital return program next month, but it's far from the most impressive yield that you can find in the world of tech stocks these days.
To that end, here are three tech stocks that offer more generous dividend yields than Apple does: Broadcom (NASDAQ: AVGO), Texas Instruments (NASDAQ: TXN), and Cisco (NASDAQ: CSCO).
1. Broadcom
Broadcom is a company that generates a gigantic -- and growing -- amount of free cash flow. The company has historically been focused on semiconductors (also more colloquially referred to as chips), but recently, it has been building up a large and highly profitable infrastructure software business, too, using its acquisitions of Brocade and CA Technologies as the foundation of that business.
What income-oriented investors need to know, though, is that Broadcom allocates about half of its previous year's free cash flow to its dividend. Broadcom just raised its dividend to $10.60 per share -- a dividend yield of about 3.54% as of writing -- after turning in about $8.2 billion in free cash flow during its fiscal year 2018. The company is forecasting free cash flow of about $10 billion for the current fiscal year, suggesting that as long as the company's forecast is roughly accurate, shareholders should be in for yet another solid dividend bump later in this calendar year.
2. Texas Instruments
Another chip company that's very committed to its capital return program is Texas Instruments. The company's policy is to return all of its free cash flow to shareholders in the form of both dividends and share repurchases. This strategy is something of a virtuous cycle -- as the company repurchases shares, reducing its overall share count, its free cash flow per share for a given level of free cash flow rises. On top of that, Texas Instruments is a good business that has seen its free cash flow trend generally up over the years, which has helped to fuel regular dividend boosts.
Today, Texas Instruments' shares offer a dividend yield of 2.9%, which is not only respectable on its own, but it's significantly greater than what Apple stock offers.
3. Cisco
Another tech company whose shares offer a larger dividend yield than Apple's do is networking technology giant Cisco Systems. Cisco is another company that generates a large amount of free cash flow and isn't shy about distributing the wealth to its shareholders. Its dividend yield as of writing stands at 2.59%.
Over the last decade or so, Cisco's free cash flow has trended up and, along with it, so has the dividend.
Cisco isn't the fastest-growing company on the planet, but it is a growing business, with analysts expecting the company to grow its revenue by 4.8% in 2019 followed by another 3.4% rise in 2020. Analysts also predict that Cisco's earnings per share (EPS) is on track to rise nearly 18.1% in 2019, followed by another 9.7% boost in 2020. Given that Cisco's business seems to be moving in the right direction, I think shareholders should be able to safely count on dividend increases in the years ahead.
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Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Texas Instruments and has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool recommends Broadcom Ltd. The Motley Fool has a disclosure policy.