The tech sector is witnessing a remarkable transformation as traditional growth companies increasingly embrace shareholder-friendly dividend policies. This year, major tech companies like Alphabet (GOOG) and Meta (META) jumped on the bandwagon with their first-ever dividend payments. This was quickly followed by significant dividend moves from other tech giants, with Nvidia (NVDA) increasing its quarterly payout by 150%.
With these trends, investors are now eyeing stocks that offer both growth and steady income. Dell Technologies (DELL), Microchip Technology (MCHP), and T-Mobile US (TMUS) are three companies that stand out for their strong market positions and dedication to rewarding shareholders with dividends. They've weathered recent market ups and downs, and maximized shareholder value while diving into high-growth areas.
Analysts rate all three as "Strong Buy," making them attractive choices for those looking to benefit from both the tech sector's growth and the benefits of passive income. Let's dig into each company's basics, growth strategies, and dividend history to see if they make sense for your portfolio.
#1. Dell Technologies Inc. (DELL)
Dell Technologies (DELL) is a well-known tech company that manufactures and sells a wide range of computer products, from laptops to large business systems and cloud services. Dell has been focusing on innovative technologies like artificial intelligence (AI) and cloud computing, which has established them as a significant player in the evolving tech space.
DELL stock has outperformed by a wide margin in 2024, up 57.6% since the start of the year and a whopping 80% over the past 52 weeks.
The company is worth about $84.75 billion by market cap, and trades at a forward price/earnings (P/E) ratio of 15.31 - well below the sector median of 24.20, which suggests DELL is potentially undervalued at current levels.
Dell offers a 1.48% dividend yield, based on its currently quarterly payment of $0.445 per share. The company has consistently grown its payouts in the post-pandemic era, with three consecutive years of dividend growth.
The latest financial report for Q2 2025 comfortably beat Wall Street's expectations. Dell reported revenue of over $25 billion in the quarter, 9% higher than last year. Their business systems division did really well, making a record $11.6 billion, mostly because they sold a lot more servers and networking gear. Adjusted earnings per share (EPS) of $1.89 beat analysts' estimates by a wide margin.
Recent strategic moves underscore Dell's commitment to AI innovation. The expansion of the Dell AI Factory with new PowerEdge servers aims to accelerate enterprise AI adoption. At the same time, the Dell AI for Telecom program seeks to transform network operations in collaboration with Nvidia. These initiatives position Dell at the forefront of AI integration in the enterprise and telecommunications sectors.
Most analysts believe that Dell's stock is a “strong buy.” Out of 19 analysts, 14 say it's a “strong buy,” 2 say it's a “moderate buy,” and 3 say to hold onto it if you've got it. This group thinks the stock could go up to $147.79, on average, which would be a 22.6% increase from where it is now.
#2. Microchip Technology Inc. (MCHP)
Microchip Technology (MCHP) is a big name in smart, connected, and secure tech solutions. They make everything from microcontrollers to analog chips and FPGAs, serving industries like automotive and telecommunications. The semiconductor specialist focuses on providing high-performance, customizable products that meet various industry needs.
MCHP stock has dropped 15.9% so far this year, and is nearly flat over the past 52 weeks.
With a market cap of $40.38 billion, Microchip's forward P/E ratio is 37.89, indicating that the stock still commands a premium valuation at current levels.
That said, MCHP offers a healthy forward dividend yield of 2.41%, which is above the tech sector average of 1.37%. The quarterly dividend of $0.454 per share adds up to an annual dividend of $1.82, and the company has increased its dividend for 23 straight years - putting Microchip on pace for Dividend Aristocrat status.
In the fiscal 2025 first quarter, Microchip reported net sales of $1.241 billion, down both sequentially and year-over-year. Despite this, adjusted EPS of $0.53 arrived within the expected range. Looking ahead to the second quarter, they're forecasting sales between $1.12 and $1.18 billion, with EPS expected between $0.10 and $0.14.
Recent developments highlight Microchip's focus on expanding its Wi-Fi portfolio and enabling high-capacity, multi-rate muxponders for optical transport platforms. The company added 20 new Wi-Fi products, offering solutions for various application needs and developer skill levels.
Additionally, Microchip collaborated with Acacia to demonstrate interoperability between its META-DX2 Ethernet PHY family and Acacia's Coherent Interconnect Module 8, enabling low-power, bandwidth-optimized solutions for pluggable optics.
Analysts are optimistic about Microchip, with a “strong buy” consensus rating. Fifteen out of 22 in coverage recommend it as a “strong buy,” 1 says it's a “moderate buy,” and 6 suggest a “hold.” The average target price is $93.77, indicating a potential upside of about 23.6% from its current price.
#3. T-Mobile US, Inc. (TMUS)
T-Mobile US, Inc. (TMUS) is a major domestic wireless company, famous for its "Un-carrier" approach that has shaken up the industry. They focus on offering affordable, high-quality wireless services to everyone, from individuals to big businesses.
TMUS stock has been a strong performer, delivering a one-year return of 65.6% and YTD gains of more than 45%.
The company is valued at $258.9 billion and has a forward P/E ratio of 23.12 - higher than the sector median, though its price/earnings-to-growth (PEG) ratio of 1.03 leaves some room for multiple expansion.
T-Mobile is a relative newcomer to dividend payments. The carrier currently offers a dividend yield of 1.61%, based on its payments of $0.65 per share quarterly.
The company's recent financial results are impressive. Second-quarter revenue hit $19.77 billion, a 4% increase from last year. Postpaid service revenue rose 7% to $12.9 billion. Net income jumped 32% to $2.9 billion, and EPS increased by 34% to $2.49. They also reported record cash flow figures from operating activities of $5.5 billion and adjusted free cash flow of $4.4 billion, reflecting their operational efficiency.
Recent collaborations highlight T-Mobile's commitment to expanding its 5G capabilities and offerings. The company partnered with TCL to launch the TCL LINKPORT IK511. This 5G connectivity device enables laptops and tablets to access T-Mobile's standalone 5G network, featuring the Snapdragon X35 5G Modem-RF System. Additionally, T-Mobile introduced 5G On Demand, a portable 5G private network solution that simplifies the deployment of 5G networks for various industries.
Analysts have an average “strong buy” rating for TMUS, with 18 out of 25 rating it a “strong buy,” 4 suggesting a “moderate buy,” 2 recommending a “hold,” and only 1 issuing a “strong sell” rating. The stock has surpassed its average target price of $224.02, while the Street-high target of $271 is 16% overhead.
Conclusion
In summary, Dell, Microchip Technology, and T-Mobile each offer compelling opportunities for investors seeking growth and dividends in the tech sector. Dell's robust performance and strategic focus on AI position it well for future gains. Microchip Technology, despite recent volatility, remains a strong contender with its extensive product portfolio and consistent dividend increases. T-Mobile's impressive market momentum and innovative 5G initiatives make it a leader in telecommunications. Together, these “strong buy” stocks present a balanced approach to investing in technology's future, while enjoying steady income from dividends.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
