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2 Soaring Tech Stocks With Amazing Dividends
The Motley Fool· 2025-07-03 11:15
Core Viewpoint - The tech sector offers attractive dividend opportunities, with IBM and AT&T being prime examples of companies that have delivered solid dividends and impressive gains for investors over recent years [1]. Group 1: IBM - IBM's shares have more than doubled in the past three years due to a successful turnaround, driven by its focus on hybrid cloud computing and artificial intelligence [3]. - The company anticipates at least 5% growth in currency-adjusted revenue for 2025, alongside projected free cash flow of approximately $13.5 billion [3]. - IBM has secured $6 billion in generative AI-related bookings, leveraging its watsonx platform and consulting services to address enterprise needs [4]. - The latest dividend increase was minimal, raising the quarterly dividend to $1.68 per share, resulting in a yield of around 2.3% [5]. - With rising free cash flow, IBM's dividend is expected to consume less than half of its free cash flow in 2025, allowing for potential debt reduction and future dividend hikes [6]. Group 2: AT&T - AT&T's shares have surged about 110% since mid-2023, as investor sentiment has improved following previous challenges related to media acquisitions [7]. - The company is concentrating on expanding its 5G wireless and fiber networks, having recently reached its 30 millionth fiber location and planning to double this by 2030 [8]. - For 2025, AT&T projects a 3% growth in mobility service revenue and a mid-teens percentage increase in consumer fiber revenue, with free cash flow expected to exceed $16 billion [9]. - The current quarterly dividend stands at $0.2775 per share, yielding 3.8%, with approximately $8 billion allocated for dividends this year, representing about half of its free cash flow [10]. - AT&T has maintained its dividend payments since cutting them during the WarnerMedia spin-off, but plans to resume share repurchases and may consider a dividend increase soon [11].