These Top-Ranked AI Stocks Pay Dividends

Dividends come with many great perks, with the payouts essentially reflecting a form of ‘payday’ in the market. Technology sector stocks are often overlooked by income-focused investors, as these companies commonly use spare cash to fuel further growth.

But perhaps to the surprise of some, several stocks involved closely in the AI trade – Broadcom AVGO and Vertiv VRT  – shell out dividend payments. For those interested in getting paid with some AI exposure, let’s take a closer look at each.

Broadcom Posts Record Revenue

Broadcom, currently a Zacks Rank #2 (Buy), has quickly entered the AI race, evolving a broad portfolio of technologies to extend its leadership in enabling next-generation AI infrastructure. Shares currently yield 0.8% annually, with the company sporting a shareholder-friendly 13.3% five-year annualized dividend growth rate.

The stock has long been a favorite among those seeking tech exposure paired with paydays, with the company’s strong cash-generating abilities allowing it to consistently reward shareholders in a big way over its history. Below is a chart illustrating its dividends/share paid on an annual basis.

Please note that the final value in the chart is calculated on a trailing twelve-month basis.

Free cash flow of $6.4 billion throughout the latest period showed 44% YoY growth and reflected a quarterly record. Below is a chart illustrating AVGO’s free cash flow on a quarterly basis.

In addition, AI revenue of $4.4 billion during its latest period showed significant momentum, rising 46% year-over-year. It’s more than reasonable to expect strong momentum again within its AI offerings for its Q3 release expected in early September, with AVGO guiding for $5.1 billion in AI sales for the period.

Analysts have shown bullishness for the upcoming release, with forecasted sales of $15.8 billion reflecting 34% YoY growth from the same period last year.

Vertiv Benefits from Data Center Buildout

Vertiv, a current Zacks Rank #2 (Buy), provides services for data centers, communication networks, and commercial and industrial facilities with a portfolio of power, cooling, and IT infrastructure solutions and services.

Analysts have dialed their current fiscal year EPS expectations higher over the past year thanks to bullish results stemming from strong demand, with the current $3.82 Zacks Consensus EPS estimate suggesting 35% YoY growth and up 15% over the past year.

While shares currently yield a modest 0.1% annually, the stock still reflects a strong play for those seeking a combination of growth and yield. Below is a chart illustrating the company’s sales on a quarterly basis.

Bottom Line

Dividends offer significant benefits for investors, providing a passive income stream and the opportunity to maximize returns through dividend reinvestment.

Although both dividend-paying tech stocks above – Broadcom AVGO and Vertiv VRT – aren’t high-yield, the bullish outlook for these companies’ AI offerings can’t be overlooked by income-focused investors seeking the join the frenzy.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research