From Morningstar: 2024-05-20 11:31:00

Major tech companies such as Alphabet, Meta Platforms, and Salesforce are now offering dividends to investors, leading to a shift in dividend growth strategies towards tech stocks. While the yields may be small, the potential for growth is attractive. High-tech names now make up a larger portion of dividend growth indexes, reflecting a broader change in investing trends.

Technology companies traditionally reinvest their cash into business growth rather than paying dividends. However, key players like Texas Instruments, Analog Devices, and Broadcom have started issuing dividends over the years. The Morningstar US Target Market Exposure Index has seen a rise in dividend-paying tech stocks. Despite more companies offering dividends, the yields remain low compared to other sectors.

Dividend strategies can focus on income or growth, with tech stocks typically falling under the growth category. Funds like Franklin Rising Dividends and T. Rowe Price Dividend Growth hold significant portions in tech stocks like Microsoft and Apple. However, income strategies have less exposure to tech stocks, with the Morningstar Dividend Yield Focus Index having only 8% allocated to tech names.



Read more at Morningstar: Tech Stock Dividends Are Changing Income Investing