Now is a good time for investors to add these industry-leading companies to their long-term portfolios.
One of the best things about investing in stocks is that you don't always need share-price growth to make money. Thanks to dividends, investors can be rewarded regardless of a company's stock price performance. In some cases, a dividend is the reason to invest.
Given their success over the past couple of decades, tech companies have the reputation of being growth stocks, but that doesn't give the full picture. There are plenty of tech stocks that also pay out dividends. Some are dividend-focused, while others are growth-focused with a two-for-one benefit of a dividend.
If you're looking to invest in tech companies that pay out dividends, then AT&T (T -0.33%), Meta Platforms (META 0.26%), and Taiwan Semiconductor Manufacturing (TSM -0.56%) should be on your radar.
1. AT&T
You'll find plenty of investors who have a love/hate relationship with telecom giant AT&T.On one end, the company's stock price is down by almost a third over the past five years. On the other end, the stock's total returns are almost flat over that span because of AT&T's lucrative dividend.
The quarterly dividend is $0.2775 ($1.11 annually), and its trailing 12-month (TTM) yield is over 6.3%. That makes it one of the higher-yielding dividend stocks in the S&P 500.
While AT&T was restructuring and getting rid of its WarnerMedia assets, there were concerns that it couldn't keep up its dividend because of its high debt obligations. But its recent business performance quieted many of those concerns. Its operating cash flow and free cash flow in 2023 were more than enough to cover the $8.1 billion in dividends paid.
T cash from operations (annual) data by YCharts.
Investors shouldn't expect too much revenue growth from AT&T in the next few years, but the company is positioning itself for the future as it trims down and refocuses on its core telecom business. Telecom is an industry that's become vital to American life, and AT&T is a huge part of the infrastructure.
Its lucrative dividend should help buy it some patience from investors as it attempts to turn the corner.
2. Meta Platforms
If you're not used to seeing Meta Platforms in an article about dividend stocks, don't worry; you're not alone. That's because Meta just declared the first dividend in company history in February.
Meta's quarterly dividend is $0.50 per share, with a yield of around 0.40%. This dividend yield isn't breathtaking by any means, but given Meta stock's potential for price growth, it's a true added benefit for investors.
Meta's newly declared dividend comes at a time when the company is sitting on a massive cash pile. At the end of 2023, it had $65.4 billion in cash, cash equivalents, and marketable securities. With seemingly no obvious place to put all the cash to use, the board of directors and management decided it was time to begin rewarding investors with cash payouts.
After not paying a dividend since its May 2012 initial public offering, it's fair to assume Meta wouldn't have begun paying one if it didn't believe it could continue it and increase it annually. Considering the roughly $43 billion in free cash flow it made in 2023, I'm willing to bet it does. Cash seems to be the least of the company's problems right now, which should be music to investors' ears.
3. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing, commonly known as TSMC, is the world's largest semiconductor foundry, and the competition is not particularly close.
The effectiveness and reliability of TSMC's semiconductors have made it the go-to choice for top companies like Apple, Nvidia, Tesla, and plenty more. For years, the company has been producing semiconductors that power many of today's electronics, and it's been a blessing for its financials, particularly over the past five years.
TSM revenue (quarterly) data by YCharts.
The strength of TSMC's financials should give investors faith that the company will continue rewarding investors with a solid dividend in the long term. The quarterly dividend is $0.51 per share, and there's no reason to believe it won't continue growing -- especially considering the AI-fueled boost its financials are expected to receive in the coming years.
TSMC's stock rallied recently but has pulled back from its March high. This gives investors a more attractive entry point, with the dividend yield around 1.6%. It's not the ultra-high yield you'll see from a company like AT&T, but it's enough to complement a stock with plenty of growth potential.
The company's importance to the tech world can sometimes be underappreciated because it doesn't make consumer-facing products or services, but it's still a great business that can be an excellent long-term asset in investors' portfolios.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Stefon Walters has positions in Apple. The Motley Fool has positions in and recommends Apple, Meta Platforms, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.
