Although the global economy has slowed down considerably since the beginning of the year, there are still some companies that are managing to overcome the market. Here are 5 top tech stocks that look like a promising investment for this year. Some of these companies are included on the list because they represent a growing field or technology while others are well-established, but have the benefit of paying dividends.
The Tech Industry and Dividends
The technology sector is one of the only industries that has actually been outperforming the S&P this year. According to Matt Krantz, the finance journalist best known for the Investing For Dummies books, profits in the tech sector will rise 1.4% in 2020, despite the fact that most businesses are having their margins squeezed. Rising profits lead to higher dividends, making this a good industry to invest in if you want to make an income on your longer term investments.
This year, over 40 of the S&P 500 companies got rid of their dividend, but only two of those 40 were from the tech sector. The other S&P 500 tech companies actually increased dividends 14 times. Whether your goal is a long term tech investment or extra spending money from dividends, you should explore the tech companies included in the S&P 500.
Krantz suggests that those looking to get some income on their long term investments should look no further than Nvidia. Nvidia designs graphics processing units (GPUs) and system on a chip (Soc) units for mobile commuting and vehicles. It’s also the newest member to join the small number of S&P 500 tech companies which pay dividends. The company performed extremely well this quarter and is in the perfect position for continued growth. Nvidia’s strength in artificial intelligence and graphics will make it increasingly applicable for the duration of work-from-home and for the coming years.
It’s quarterly reports were very promising with earnings per diluted share up 130% from a year ago. The company also saw revenue of $3.08 billion, up 39% from last year. Shares are up over 50% this year which has caused some to overlook the fact that this great investment also pays a small dividend. This is a great buy as you get short and long term investment with one purchase.
Zacks Investment Research, the company responsible for Zacks ratings, says that Microsoft is “a great growth stock.” The software company received a B Zacks Growth Style Score, indicating it has high growth prospects and a #2 Zacks Rank, labeling it a “Buy.” Zacks’ method of measuring the growth score is more than just a simple traditional projection as it takes into account much more information about the current economic environment.
Microsoft is similar to Nvidia in that it’s also having a high performance year and offering dividends. However, dividends on this stock are much higher, yielding 1.1%, which is the highest of all the S&P tech stocks. Also, the company experienced a 17.7% gain, making these shares an investment you’ll see money on within the year. Profit has increased around 20% year-to-date, even amid a pandemic, and its credit rating is in place. It’s an oldie but a goodie, showing no sign of slowing down soon.
Apple has grown at half the rate of Microsoft year-to-date, but the yield is almost the same. This is very attractive to the dividend-focused crowd. It’s a pricey buy, currently trading at $318.89 per share, but given its track record, it’s a very safe long term investment. Will Ebiefung, who has covered the stock market for CNN, The Motley Fool, Seeking Alpha, and Smarter Analyst says, “with a payout ratio of just 25%, coupled with $90 billion of cash and over $75 billion of share repurchases in just the past year, the company is set to return massive value to shareholders for the foreseeable future.” It also has a 93 composite rating, meaning it’s outperformed 93% of companies in the market.
Inphi is a semiconductor components and optical subsystems producer. Their first quarter this year showed amazing growth, with their revenue up 70%. The shift towards 5G and data centers was only helped along by the coronavirus pandemic leading to a huge expansion for the company. Now, the stock is up over 50% year-to-date and 235% over the past two years.
A company whose self-proclaimed speciality is to “move big data fast, around the globe” is bound to succeed with increased remote work and globalization.
Zacks said of Inphi (Ticker: IPHI) on Yahoo Finance, “if you are looking for a fast growing stock that is still seeing plenty of opportunities on the horizon, make sure to consider IPHI.”
Zynga designs video game software, with a special emphasis on mobile gaming. Asian phone markets have been showing a growing trend towards gaming phones, and an increase in gaming tablet devices. The COVID-19 pandemic only adds to the increasing demand for mobile gaming technology. Even amid an 8% decline in the S&P 500, Zynga shares increased 34% year-to-date.
According to Zynga’s quarterly report, the company saw revenue increase 52%, mostly thanks to its online gaming segment, which grew 72%. Also, Zynga has a lot of liquid capital as well as strong investment holdings meaning they could easily acquire a company if they are interested in another’s service or technology. Zynga was founded in 2007, making it still relatively young. Therefore it’s somewhat small profit margin is not unusual. What is important is that it’s been able to lower its losses considerably this year.