ITRN - 7 Tech Stocks Blending Growth and Income for Maximum Returns

2024-05-01 13:13:27 ET

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While innovators tend to be focused on one thing – expansion – it’s possible to have the best of both worlds, which brings us to tech stocks for growth and income.

Primarily, what’s beautiful about this market subsector is that you don’t have to choose between either attribute. That’s a powerful advantage given the unusual circumstances we’re in. If the market decides to correct, enterprises that pay dividends tend to be more stable.

Secondly, the tech space itself has soared. Because of this, it’s just harder to find good deals. With tech stocks for growth and income, you have a greater chance of holistic profitability.

Climb Global Solutions (CLMB)

Operating in the electronics and computer distribution sector, Climb Global Solutions (NASDAQ: CLMB ) operates as a value-added information technology ( IT ) distribution and solutions firm. Primarily, it conducts business in the U.S., Canada, Europe and the U.K. It operates in two segments, Distribution and Solutions.

In terms of financial performance, Climb Global has been all over the map last fiscal year. However, it did end 2023 on a high note, delivering earnings per share of $1.15 against a target calling for 68 cents. For the current fiscal year, experts are projecting EPS to land at $2.92, above last year’s print of $2.72. For sales, they’re looking at $410.24 million, up 16.5% from the prior year.

To be upfront, Climb Global isn’t exactly the most generous enterprise out there. Its forward annual dividend yield comes out to 1%. Still, the payout ratio is super low at 25%, suggesting high confidence for yield sustainability. If you’re interested in an expanding business with some income to the side, CLMB presents a solid case for tech stocks for growth and income.

Taiwan Semiconductor (TSM)

Falling under the namesake semiconductor category, Taiwan Semiconductor (NYSE: TSM ) manufactures, packages, tests and sells integrated circuits (ICs). and other semiconductor devices. Often labeled as the world’s most important chipmaker, TSMC is responsible for about 90% of the world’s most advanced semiconductors . It may be the most relevant idea among tech stocks for growth and income.

Unsurprisingly given the demand for its products, TSMC has been a consistent performer. In the past four quarters, the company’s average positive earnings surprise came out to 6.55%. For the current year, experts believe that EPS will hit $6.28. That’s not an unreasonable target and stands well above last year’s result of $5.19.

On the top line, analysts anticipate sales of $84.52 billion. Again, that’s not unreasonable and represents a 21.8% growth rate from the prior year. Along with that growth, TSMC offers a forward yield of 1.48%. It’s not super generous. However, the low payout ratio of 36.22% provides confidence in yield sustainability.

Broadcom (AVGO)

Another powerhouse in the semiconductor industry, Broadcom (NASDAQ: AVGO ) designs, develops and supplies various semiconductor devices. It has a focus on complex digital and mixed signal complementary metal oxide semiconductor-based devices. Per its public profile , Broadcom operates in two segments: Semiconductor Solutions and Infrastructure Software.

While the company doesn’t exactly light up the board, it consistently gets the job done. Last fiscal year, Broadcom’s average positive earnings surprise came out to 2.78%. It ended fiscal 2023 on a high note, delivering EPS of $10.99 against a target of $10.29. For the current year, experts believe that EPS could rise to $46.92, above 2023’s print of $42.25.

On the top line, analysts believe revenue could reach $50.35 billion. If so, that would amount to a 40.6% growth rate from last year’s tally of $35.82 billion. Not only that, Broadcom offers a forward yield of 1.57%. While it’s not the most generous yield, it’s difficult to get passive income on such a high projected growth rate. Thus, it’s a great idea for tech stocks for growth and income.

Ituran Location and Control (ITRN)

Specializing in communication equipment, Ituran Location and Control (NASDAQ: ITRN ) provides location-based telematics services and machine-to-machine telematics products. It operates through two segments: Telematics Services and Telematics Products. Notably, Ituran provides services such as the ability to locate, track and recover stolen vehicles for its subscribers.

Frankly, Ituran might not be the most recognizable name among tech stocks for growth and income. However, it definitely deserves consideration for its strong financial performance. In fiscal 2023, the company’s average positive earnings surprise came out to 7.35%. Its best performance was in the second quarter with an earnings surprise of 15.1%.

For fiscal 2024, analysts anticipate earnings to hit $2.49 per share on revenue of $342.9 million. That’s up from last year’s results of $2.40 EPS on sales of $319.98 million. The next year, Ituran’s top line could expand to $377.7 million.

While the growth is enticing, the company also provides a forward annual dividend yield of 3.53%. With a low payout ratio of 28.22%, it’s well balanced.

Upbound (UPBD)

Specializing in application software, Upbound (NASDAQ: UPBD ) leases household durable goods to customers on a lease-to-own basis in the U.S., Puerto Rico and Mexico. It operates through four segments: Rent-A-Center, Acima, Mexico and Franchising. Since the start of the year, UPBD lost nearly 9% of equity value. Still, it could be an intriguing idea for tech stocks for growth and income.

One factor that makes Upbound enticing is its robust financial performance. Last fiscal year, the company’s average positive earnings surprise clocked in at over 21%. Its best performance was in Q2, with EPS of $1.11 blowing past the expectation of 75 cents. For the current year, experts believe earnings will rise to $3.77 per share. That’s above last year’s result of $3.55.

On the top line, experts project revenue of $4.14 billion. That’s up 3.7% from the prior year’s print of $3.99 billion. Notably, the forward annual dividend yield stands at 4.66%. However, the payout ratio is very high so that’s something to watch.

Magic Software (MGIC)

Operating in the IT services space, Magic Software (NASDAQ: MGIC ) provides proprietary application development, vertical software solutions, business process integration and IT outsourcing software services. It also offers cloud-based services in Israel and internationally. Given the broader migration to the cloud, Magic could be an underappreciated idea among tech stocks for growth and income.

Last fiscal year, Magic had one bad miss. In Q3, it posted EPS of 21 cents against a target of 26 cents. However, even inclusive of this miss, the average positive earnings surprise came out to 3.7%. For the current year, analysts on average see EPS reaching 97 cents, which is 2 cents below last year’s print. However, the high-side estimate calls for EPS of $1.02.

On the top line, experts believe sales could reach a consensus target of $542.76 million, with a high-side view of $545.55 million. In 2023, the company generated $535.05 million. Enticingly, Magic offers a forward yield of 5.49%, which could invite speculators. Still, it must be pointed out that the payout ratio comes in at 83.6%.

Himax Technologies (HIMX)

A fabless semiconductor company, Himax Technologies (NASDAQ: HIMX ) provides display imaging processing technologies. It mainly offers display driver ICs and timing controllers that are used in various products, including televisions, PC monitors, laptops, mobile phones, tablets and automotive interfaces, among many other applications. While it’s not a household name per say, HIMX ranks among the most important ideas among tech stocks for growth and income.

Given the everyday demand for display imaging processing solutions, it’s no surprise that Himax has enjoyed strong financial performances. Most notably, the company posted EPS of 6 cents against a target of 4 cents in Q3 last year. For the current year, analysts are looking for EPS to reach 35 cents, above 2023’s print of 29 cents.

On the top line, sales could hit $915.84 million with a high-side estimate of $964 million. Last year, revenue landed at $945.43 million. Enticingly, Himax offers a forward annual dividend yield of 9.45%. It’s risky because the payout ratio is sky high. Still, if you want growth and robust income, HIMX could be your ticket.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

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