These great businesses offer high growth potential and stable dividend income.
Most investors who buy tech stocks do so in anticipation of high growth and the potential for share price appreciation, which makes sense considering tech stocks have been some of the biggest winners over the past decade.
On the other hand, some investors prefer dividend-paying stocks, and in some cases, it may be worth giving up some growth potential in order to get a steady, reliable income from dividends.
But what's less known is that many high-growth tech stocks also pay dividends. These stocks potentially offer the best of both worlds: investors looking for growth and stock price appreciation can also earn dividend income in the process, improving their total return over the long term. With that in mind, here are three dividend-paying stocks worth buying right now.
ASML
Dutch company ASML (ASML 2.35%) makes lithography equipment needed to make semiconductors. It's the only company in the world that sells these machines, which make cutting-edge chips. As a company essential to a critical product like semiconductors, it's no wonder its stock price has risen 1,170% over the past decade, far outpacing the S&P 500's total return of 241%.
Currently, ASML has a dividend yield of 0.71%. While that doesn't seem all that impressive at first glance, things change when you look back at how the stock has performed over the past 10 years and include dividends. If you invested $1,000 in ASML 10 years ago, it would be worth $11,590 today without dividends and $12,730 with dividends.
Management expects 2024 to be a year of slower growth as much of the semiconductor industry is in a down cycle, but ASML has enough orders that it should be able to get through the year without issue and expects a return to growth in 2025.
Microsoft
Long known for its Windows operating system and office software suite, Microsoft (MSFT, 0.74%) has been making headlines recently for its foray into artificial intelligence (AI): Microsoft has invested heavily in OpenAI and has begun integrating generative AI into many of its products.
The company has also seen an increase in cloud revenue from its Azure cloud computing business as other companies need additional computing power for their own AI efforts.
Like ASML, Microsoft has been a market-beating stock over the past decade, with a total return of 1,160%. Without dividends, this return would be 972%. Its current dividend yield is 0.69%.
Microsoft expects its cloud infrastructure business, Azure, to grow 30-31% this quarter, driven by increased AI spending by customers, in line with its recently reported third-quarter fiscal 2024 results.
alphabet
Strictly speaking, Alphabet (GOOG, 0.72%; GOOGL, 0.83%) isn't a dividend stock yet. Shareholders of record as of June 10 will receive Alphabet's first dividend on June 17.
The new dividend program was announced alongside the company's first-quarter earnings in April. The initiation of a dividend isn't all that surprising, given that Alphabet generated $16 billion in free cash flow in the first quarter and has more than $110 billion in cash, cash equivalents and marketable securities on its balance sheet.
First off, Alphabet's dividend yield isn't anything special – about 0.5% based on the stock's price at the time of its Q1 earnings release. But because the company generates a lot of cash, there's a good chance the dividend will grow over time, which could be worth considering for anyone approaching retirement and looking to grow their dividend income in the future.
The dividend announcement may have been the headline-grabbing news for the first quarter, but the rest of the results were impressive too: Revenue increased 15%, operating margins rose 7 percentage points, and earnings per share increased 62%.
Alphabet is also making moves in the AI ​​world. At a recent event, the company touted Gemini AI in an effort to catch up with Microsoft's ChatGPT. Users of Alphabet's popular Google products, including Gmail, Google Photos, and Google Search, can expect to see even more AI integration in the future.
Suzanne Frey, an Alphabet executive, is a director of The Motley Fool. Jeff Santoro has invested in ASML and Microsoft. The Motley Fool has invested in and recommends ASML, Alphabet, and Microsoft. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
