Federal Reserve Chairman Jerome Powell spoke Friday morning in a highly anticipated speech in Jackson Hole. Powell might not have said exactly what investors and Wall Street would have hoped, but he did say the U.S. central bank was prepared to provide more stimulus, via rate cuts, if the global economic pullback negatively impacts the U.S. economy.
The speech came just days after President Trump called for the Fed in a pair of tweets to cut its benchmark interest rate by at least a full percentage point. This came after the central bank last month cut rates for the first time since the financial crisis.
More rate cuts could come later this year, but Powell spoke about the limits of monetary policy to stimulate the economy amid larger uncertainty. “There are, however, no recent precedents to guide any policy response to the current situation," Powel said in prepared remarks Friday.
"Moreover, while monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade.”
Amid the macroeconomic worries, investors have fled to safe haven assets such as the 10-year U.S. Treasury note, which has driven its yield down to 1.54% as of Friday morning, from 2.07% on July 26 and 2.33% three months ago. These low yields might make Wall Street look for higher returns elsewhere, no matter what happens on the trade war front, in a phenomenon known as the Tina effect or “there is no alternative” to stocks.
With this in mind, we searched using the Zacks Stock Screener for large-cap technology firms that also pay a dividend. Here are 3 of the strong tech stocks that came through our screen this morning…
1. Texas Instruments TXN
Texas Instruments manufactures analog and embedded semiconductors that help power everything from connected devices to automated factories. The broader chip industry has hit a bit of a downturn, which is hardly uncommon in this historically cyclical market that is reliant on broader business cycles. With that said, semiconductors will continue to drive forward technology for years to come, and TXN stock has easily outpaced the chip market over the last year years. Plus, Texas Instruments shares have popped 8% in the last 12 months against the industry’s 11% decline, and are up 30% in 2019 compared to the Semi-General’s 14% climb.
The Dallas-based company, with a $114 billion market cap, posted stronger-than-projected Q2 results in late July. TXN’s full-year 2019 earnings and revenue are projected to slip, but look poised to bounce back in 2020, based on our current estimates. TXN’s earnings estimate revision activity has also turned far more positive recently, which helps it earn a Zacks Rank #2 (Buy).
Plus, TXN sports an “A” grade for Growth in our Style Score system and currently pays an annualized dividend of $3.08 a share, with a 2.46% yield. Investors will also likely be pleased to hear that Texas Instruments has raised its quarterly dividend for 15 years in a row, with a compounded annual growth rate of 21% over the past last five years.
2. Verizon VZ
Verizon topped quarterly earnings estimates at the start of August and added 245,000 phone net additions, up from 199,000 added in the year-ago period, which topped analyst expectations. VZ has also pushed to roll out its 5G service to more cities throughout the country as it battles rival AT&T T, as well a possible larger third player—the joint Sprint S and T- Mobile US TMUS—in the next-generation of wireless communication. Shares of VZ are up over 16% in the last two years to easily top the wireless industry’s 1.5% average climb.
Looking ahead, our current Zacks Consensus Estimates call for Verizon’s full-year revenue to climb 0.40% to $131.37 billion, with earnings projected to jump nearly 2%. Peaking ahead to fiscal 2020, VZ is expected to see its revenue climb 1.1% above our current-year estimate, with EPS expected to come in 1.7% higher.
Verizon’s longer-term earnings estimate revision activity has trended heavily in the right direction, which helps VZ earn a Zacks Rank #2 (Buy) at the moment. VZ also rocks “A” grades for Value and Momentum, as well as a “B” grade for Growth. Plus, the wireless giant’s $2.41 a share annualized payout helps its dividend yield rests at an impressive 4.24%.
3. Microsoft MSFT
Shares of Microsoft have outpaced its industry’s average in 2019, up 33%. This climbed has helped MSFT become the world’s most valuable public company, with a market cap over $1 trillion. The historic tech powerhouse’s run is even more impressive over the last five years, as its expansion into cloud computing attracts more investors. Last quarter, the firm’s Intelligent Cloud division jumped 19%, with Azure up 64%. Meanwhile, Microsoft’s Office, Windows, gaming, and other segments have expanded at impressive clips.
On top of that, the Redmond, Washington-based firm currently pays an annualized dividend of $1.84, which is up nearly 10% from the prior year’s quarterly payout. Despite MSFT’s climb (up 134% over the past three years against the S&P 500’s 34%), the company’s yield comes in at 1.34%. Like its peers, Microsoft is a Zacks Rank #2 (Buy) right now that also holds an “A” grade for Growth.
Furthermore, MSFT’s current fiscal 2020 and 2021 revenues are projected to jump 11% and 10.5%, respectively. And the company’s EPS figure is projected to climb roughly 10% this year and 12.8% higher in the following year.
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AT&T Inc. (T) : Free Stock Analysis Report
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