The technology sector is not closely associated with dividend payouts. Instead, the technology sector is more closely linked with growth stocks.

But this has changed somewhat in recent years, and now many technology stocks pay dividends to shareholders. And, thanks to their strong profitability and free cash flow, tech stocks can grow their dividends at a high rate each year. 

This article will discuss 3 under-the-radar tech stocks that combine growth and dividends.

Qualcomm, Inc. (QCOM)

Qualcomm, as it is known today, develops and sells integrated circuits for use in voice and data communications. The chip maker receives royalty payments for its patents used in devices that are on 3G, 4G, and 5G networks. On April 12th, 2024, Qualcomm increased its quarterly dividend 6.3% to $0.85, marking the company’s 22nd consecutive year of dividend growth. 

On July 31st, 2024, Qualcomm reported for the third quarter of fiscal year 2024 for the period ending June 23rd, 2024. For the quarter, revenue grew 11.3% to $9.39 billion, which was $170 million above estimates. Adjusted earnings-per-share of $2.33 compared favorably to $1.87 in the previous year and was $0.07 better than expected. 

For the quarter, revenues for Qualcomm CDMA Technologies, or QCT, improved 12% to $8.07 billion. Handset sales increased 12% to $5.9 billion while automotive sales surged 87% to $811 million. Qualcomm Technology Licensing, or QTL, grew 3% to $1.27 billion. Qualcomm repurchased seven million shares at an average price of $185.71 during the quarter.

The company has grown earnings-per share at a rate of 5.4% per year over the last decade, but that growth rate accelerates to nearly 21% for the last five years. Agreements with major handset providers, a lower share count, leadership in 5G, and AI should allow the company to grow in the coming years. We reaffirm our earnings-per-share growth rate of 7% through fiscal year 2029.

Qualcomm earnings declined during the last recession and would likely do so in the event of the next one. While handheld devices have become a necessity amongst consumers, the company would likely see a decline in earnings-per share due to their high costs. 

The components that Qualcomm produces are considered to be the best available, so phone makers will likely continue using the company’s products in future iterations of their devices. This is especially true as 5G launches and handset cycle upgrades continue to occur.

Littelfuse (LFUS)

Littelfuse is a global manufacturer and distributor of circuit protection, power control, and sensing products, operating across the Asia-Pacific, the Americas, and Europe. The company is divided into three segments: Electronics, Transportation, and Industrial. 

The Electronics segment provides a range of products such as fuses, resettable fuses, suppressors, varistors, and semiconductor components, serving diverse markets like automotive, telecommunications, and alternative energy. The Transportation segment makes fuses, switches, relays, and sensors primarily for heavy-duty vehicles. The Industrial segment specializes in fuses, relays, transformers, and sensors for various applications, including renewable energy, HVAC, and industrial automation, catering to various industries. 

On April 30th, 2024, the company announced results for the first quarter of 2024. Littelfuse reported non-GAAP EPS of $1.76, beating the market estimates by $0.01. Littelfuse reported net sales of $535 million—the outcome led to a 12% decline organically year-on-year. The GAAP diluted EPS measured revealed an amount of $1.93, while the adjusted EPS was recorded at $1.76. On an operating level, the company's cash flows were $57 million, and the cash flows generated freely were $42 million. 

President and CEO Dave Heinzmann explained that performance consistency was driven by diversified market exposure and selective strategic portfolio optimization, limiting inventory's negative repercussions. He also noted the sound cash generation and firm balance sheet, which will put the company in a position for growth in the future.

With our EPS growth forecast of 15.0% over the next five years, the estimated EPS by 2029 stands at $19.28. Moreover, the company has a solid record of paying dividends despite operating in a cyclical sector, as Littelfuse has paid increasing dividends for the past 14 years. LFUS stock currently yields 1.1%.

Cisco Systems (CSCO)

Cisco Systems is the global leader in high performance computer networking systems. The company’s routers and switches allow networks around the world to connect to each other through the internet. Cisco also offers data center, cloud, and security products. The company went public on February 16th, 1990. Today, Cisco employs more than 79,000 people and generates almost $54 billion in annual revenues. 

On February 14th, 2024, Cisco announced a 2.6% dividend increase in the quarterly payment to $0.40. On March 18th, 2024, Cisco completed its $28 billion purchase of cybersecurity company Splunk. 

On August 14th, 2024, Cisco reported results for the fourth quarter and fiscal year 2024 for the period ending July 27th, 2024. For the quarter, revenue fell 10.3% to $13.6 billion, but this was $100 million ahead of estimates. Adjusted earnings-per-share of $0.87 compared unfavorably to adjusted earnings-per-share of $1.14 in the prior year, but this was $0.02 more than expected. 

For the year, revenue declined 6% to $53.8 billion while adjusted earnings-per-share of $3.73 compared to $3.89 in the prior fiscal year. This was the second quarter that included the company’s acquisition of Splunk, which contributed $4.3 billion to the annualized recurring revenue total of $29.6 billion. For the most recent quarter, Networking declined 28%, Security surged 81%, Collaboration was once again flat, and Observability was up 4127%. 

By region, the Americas decreased 4%, Europe/Middle East/Africa was lower by 7%, and Asia-Pacific/Japan/China was down by 8%. Total gross margins expanded 30 basis points to 64.4%. Deferred revenue grew 11% to $28.5 billion. Cisco repurchased 43 million shares at an average price of $46.80 during the quarter. The company’s remaining share repurchase authorization is $5.2 billion, or 2.6% of the current market cap. 

Cisco provided an outlook for fiscal year 2025 as well, with the company expecting revenue in a range of $55 billion to $56.2 billion. Adjusted earnings-per-share is projected in a range of $3.52 to $3.58.

Disclosure: No positions in any stocks mentioned