Forget the bonuses: here are 5 safe tech stocks that deliver dividends and growth

Here are five actions to consider. I suggested each of these companies in my stock market newsletter, Examine stocks, through its dividend, the strength of its competitive advantages and the purchase of inside information. Another reason is that they have large market capitalizations, so these stocks have sufficient trading liquidity.

These companies are also financially strong based on their “Altman Z scores”. This measure combines financial strength indicators that include working capital, retained earnings, cash flow and sales relative to assets and market capitalization relative to liabilities. An Altman Z score of 3.0 or higher indicates the strength of the balance sheet, according to Goldman Sachs chief strategist David Kostin. It’s better than the S&P 500
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average of 2.8.

Currently, each of these six stocks is reasonably priced despite recent gains, as they are still trading near or below their P / E levels during the worst of the 2008-09 financial crisis. Altman’s Z-Scores and P / E indices for March 2009 are from Kostin.

1. Intel

Dividend yield 2.2%

Market capitalization: $ 250 billion

Altman Score Z: 3.8

P / E before: 13.0

As of March 2009 P / E: 24.0

Former Intel CEO Andy Grove observed that bad companies are destroyed by the crisis, good companies survive and big companies improve. You would like to know that the company you helped to become a tech giant remains firmly in the latter category.

When Grove was in charge, Intel
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surfed on the PC wave, in the “Wintel” alliance with Microsoft
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. Intel then wisely took the curve to position itself with excellent semiconductor products for cloud computing and mobile devices, the next two major trends.

According to Abhinav Davuluri, an analyst at Morningstar, the data center servers mainly run on Intel chips. “The move to the cloud has been a massive tailwind for Intel, and we believe this trend continues in the early stages as AI proliferates and requires more specialized chips,” he added. Sales in the data center division increased 43% in the first quarter, compared with overall revenue growth of 23%.

Intel is also a big player supporting 5G chips, the next big trend in mobile communications. You also benefit from the trend of working at home, which is likely to remain with us after the disappearance of the risks of COVID-19, as many people and companies have become used to it. This will continue to increase demand for PCs.

Intel is expanding several leading-edge 10-nanometer products this year, such as its Tiger Lake laptop processors, Ice Lake server chips, and Snow Ridge 5G base station chips. It will resume its 7 nanometer processor activity in 2021.

2. Texas Instruments

Dividend yield 3.1%

Market capitalization: $ 102 billion

Altman Z-Score: 11.7

Front P / E: 27.7

As of March 2009 P / E: 34.0

Texas instruments
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It makes analog and integrated chips that are used in just about everything – from toothbrushes and power grids to smartphones, data centers, military and automotive equipment, PCs and medical devices.

These chips are not easy to design and manufacture, which protects the business from competition. They’re not expensive either, so customers don’t have to switch providers. The two factors add to the kind of protective divide around the business that Berkshire Hathaway president Warren Buffett likes to see.

Texas Instruments chips handle crucial tasks, including data processing, power management, and converting aspects of the analog world such as sound or temperature to digital signals. Texas Instruments benefits from all the major technological trends such as cloud computing, the popularity of digital products and the Internet of Things.

The company said it would continue to operate its factories at the first quarter of 2020, which is probably smart, as chip makers cut production during the 2008 financial crisis and then struggled to respond to demand when it went down.

3. Qualcomm

Dividend yield: 3.3%

Market capitalization: $ 90 billion

Altman Z-Score: 3.0

Front P / E: 22.8

From March 2009 P / E: 18

Whenever someone buys a cell phone, Qualcomm
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generates revenue This is because Qualcomm is the brain behind much of the knowledge that powers smartphones, including code division multiple access (CDMA) for third generation (3G) wireless networks and the multiple access Orthogonal frequency division (OFDMA) for 4G.

The wireless world is now on the verge of another major 5G network upgrade, and Qualcomm is also helping out here. Qualcomm is not that dominant in this area, but 5G phones need to be backward compatible, so they contain 3G and 4G capabilities.

As a result, Qualcomm’s licensing activities will continue to experience solid growth over the next few years with the increase in 5G. The company also designs chips used in smartphones, but the license and royalty activity represents around 75% of operating revenue.

Above all, COVID-19 does not seem to hinder the launch of 5G. It’s a leading indicator of Qualcomm’s health, says the company’s chief financial officer, Akash Palkhiwala, making it a key component for investors. Surprisingly, Qualcomm maintained its 2020 orientation for its 5G activity during its call for results in late April. “We are very comfortable with year-round orientation,” Palkhiwala told investors.

On an index of what could soon reach the rest of the world, about three-quarters of the mobile phones launched in China so far this year were 5G. Qualcomm also benefits from two major long-term trends: the increase in wireless capabilities in cars, especially as they add self-driving capabilities, and the Internet of Things.

4. Cognitive technological solutions

Dividend yield: 1.7%

Market capitalization: $ 28 billion

Altman Score Z: 6

P / E before: 14.7

From March 2009 P / E: 11

For more than a decade, this IT consulting and outsourcing company has been the favorite of growing investors. Since early 2018, the actions of Cognizant Technology Solutions
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They stumbled because growth has slowed, and worse. Cognizant was caught in a corruption scandal in India, and earlier this year was hit by a malware attack that the company says will cost $ 70 million.

It is annoying when the tech experts you are supposed to trust for advice on how to avoid malware attacks are paralyzed by you. Another problem is now Cognizant’s high exposure to financial services companies, which are suffering damage due to the weakness of the economy and the flattening of the Treasury yield curve.

All these problems seem to me unique. Memories of scandals and incidents are disappearing. The economy will come back. At the same time, Cognizant continues to invest to expand its reach in technological fields such as the cloud, automation, analysis, the Internet of Things and social media.

Cognizant derives approximately 75% of its revenues from North America, which makes it relatively sheltered from trade wars. It also means a lot of room for growth in other parts of the world. Investors really don’t believe (making it a reverse move), but “the slowdown in growth is not far fetched,” said Julie Bhusal Sharma, analyst at Morningstar.

5. Analog devices

Dividend yield: 2.3%

Market capitalization: $ 39 billion

Altman Z-Score: 3.0

Front P / E: 24.8

From March 2009 P / E: 30

Like Texas Instruments, analog devices
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It is a major player in the field of analog chips, in particular signal processing chips. His experience and range of products make him a bet on some of the most important technological trends. These include 5G, autonomous and electric cars (requiring increasingly advanced technology and detection capabilities) and the increasing sophistication of industrial equipment. Additionally, Analog Devices has a decent protection pit in their business due to their design expertise and customer change costs.