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2 Dividend-Paying Tech Shares to Purchase in October

Lady holding remote control pointed towards a TV

Picture supply: Getty Photos.

Tech shares positive have been put via the ringer in 2022. After a chronic interval of magnificent efficiency, 2022 has seen a shifting tide. It was straightforward to search out tech shares to purchase, as they have been all hovering to new heights. Right now, most have crashed all the way down to actuality.

There are numerous examples of this. However I wish to draw your consideration to 2 dividend-paying tech shares to purchase that stand out from the remainder.

Evertz: A excessive returns enterprise yielding 6.3%

Evertz Applied sciences Restricted (TSX:ET) inventory was by no means a high-flying inventory, even within the tech growth. However this was by design, because it focuses on a special kind of enterprise than most – decrease progress however greater returns.

You see, Evertz designs, manufactures, and markets video and audio infrastructure options. It’s a world producer of broadcasting gear and options similar to encoders, decoders, and mixing consoles. The corporate offers this broadcast gear for the tv, telecommunications, and new media industries.

The enterprise has been a comparatively regular one, as we are able to see within the firm’s outcomes. It’s additionally a excessive margin one, with very robust returns. Evertz’s web margin is within the excessive teenagers (over 16%), and rising. Return on fairness is nearly 30%, with little debt. Lastly, Evertz’s money stream from operations may be very wholesome. Final yr, its money stream from operations, excluding working capital, was simply shy of $100 million. This represents a 14% improve versus 5 years in the past. Additionally, and really importantly, this firm has been persistently free money stream optimistic for a few years now, as capital expenditures have been fairly low.

These are all good numbers. They’re much better than Evertz’s peer group. Briefly, they’re a mirrored image of a excessive returns enterprise. Add all of this to the truth that Evertz has low debt and a excessive dividend yield of over 6%, and we are able to see the writing on the wall. Evertz is a stable dividend-paying tech inventory, particularly in at present’s macroeconomic surroundings. It’s additionally an affordable inventory, buying and selling at 13 occasions this yr’s anticipated earnings.

Vecima: A quick-growing enterprise with a 1.2% dividend yield

Vecima Networks Inc. (TSX:VCM) is one other dividend-paying tech inventory with a barely totally different focus – broadband and telematics. The broadband phase gives networks for cable and telecom operators to satisfy bandwidth calls for. Its telematics phase gives fleet administration software program to assist monitor vans.

So, as you’ll be able to think about, these segments are very a lot in excessive demand. That is evidenced by Vecima’s current outcomes. Income has just lately hit an all-time excessive (up 31% in 2021) and EPS elevated 30% within the firm’s newest quarter. Clearly, Vecima is a special type of dividend-paying tech inventory.

That is extra of a progress story than Evertz. Vecima’s progress is way stronger, however its margins are a lot decrease. Additionally, money flows will not be as robust – the truth is, Vecima is in a money burn scenario (free money stream unfavourable). Lastly, it’s dividend yield is a mere 1.2%. However at the very least there’s a dividend – a uncommon factor amongst excessive progress tech shares.

As well as, Vecima’s valuation is way greater than Evertz’s. Actually, it trades at a P/E of 20 occasions this yr’s anticipated earnings. That is very cheap, nonetheless, contemplating that earnings are anticipated to greater than double this yr.

Motley Idiot: The underside line

So, we’ve two very totally different, however equally engaging dividend-paying tech shares right here. They each definitely have their deserves. One is a gradual progress, however very excessive margin, excessive returns enterprise. The opposite is a fast-growing enterprise with decrease returns and money flows, and finally, a decrease dividend yield.



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