QUALCOMM Incorporated (QCOM)'s Yield Catches Wolfe's Eye

Traditionally, tech stocks weren't known for offering dividends, but that's been changing as more companies in the sector begin returning capital to shareholders this way. This shift has drawn the attention of dividend-focused investors. Wolfe Research recently highlighted this trend by identifying stocks that fall into the second-highest tier of dividend yields—those paying out between 60% and 80% of the top yields—while also maintaining relatively low price-to-earnings ratios.

This middle tier of dividend payers can be appealing to income investors because the highest-yielding stocks often face a greater risk of dividend cuts if their financial health deteriorates.

QUALCOMM Incorporated (NASDAQ:QCOM) appeared on Wolfe’s list. The company offers a dividend yield of 2.4%, and its stock has dipped only about 5% so far this year. Its forward P/E ratio stands at 12.55.

Based in California, QUALCOMM Incorporated (NASDAQ:QCOM) is a global player in semiconductors, software, and wireless technology services. It has a strong track record when it comes to dividends, having increased its payouts for 21 consecutive years. In the latest quarter alone, QUALCOMM returned $2.7 billion to shareholders, including $938 million through dividends.

Other analysts are also optimistic about QUALCOMM Incorporated (NASDAQ:QCOM). Nearly half of those covering the stock rate it as a Buy or Strong Buy, and LSEG data suggests the stock could climb nearly 20% from current levels.

While we acknowledge the potential of QCOM as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than QCOM but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.

READ MORE: 10 Unstoppable Dividend Stocks to Buy Now and 25 High Dividend Stocks Being Targeted By Short Sellers

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