Some of the best opportunities in tech may not be the stocks getting all the attention. Sometimes, it pays to look at the cheaper names hiding in plain sight. That is especially true for dividend investors.
A low valuation can be attractive, but cheap stocks can also stay cheap for a reason. The better setup is to find companies that still have earnings behind them, pay shareholders while they wait, and have enough analyst support to suggest the market may be overlooking something. Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox.
With that in mind, I screened the S&P 500 Info Tech group for dividend-paying stocks trading at relatively low forward earnings multiples. The idea is simple: look for quality companies that may be overshadowed by the sector's bigger growth stories, yet still have enough going for them to warrant a closer look. Using Barchart's Stock Screener, I selected the following filters to build my list: Annual Dividend Yield % (FWD): Set at 1% or higher to find companies with meaningful payouts.
Price/Earnings (P/E) Forward: Below 30, a little under Info Tech's roughly ~33 forward P/E ratio. Number of Analysts: 12 or more. The more, the merrier, since more analysts can give us a better read on the overall consensus.
Current Analyst Rating: Bullish stocks with "Moderate Buy" to "Strong Buy" ratings. I set these filters, hit results, and got 11 companies. I will cover the top three with the lowest forward P/E ratio.
Cognizant Technology Solutions is a tech and consulting company helping businesses modernize their operations through digital solutions, including AI and cloud computing. Large companies like McDonald's turn to Cognizant to help keep the technology behind their operations fresh. CTSH stock is trading at around $59 with a forward P/E ratio of around 10.6x, the lowest in this list.
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