Corning Leads 3 Oversold Tech Stocks That Also Pay Dividends. This Chip Stock Has Up to 84% Upside.
Buy Button by Formatoriginal via Shutterstock Even the most famous dividend stocks can fall out of favor. Sure, the tech industry may be one of the most sought-after industries today, but that does not mean every stock performs well all the time. With cutthroat competition and fast-changing sentiment, share prices can easily fall even when…
Even the most famous dividend stocks can fall out of favor. Sure, the tech industry may be one of the most sought-after industries today, but that does not mean every stock performs well all the time. With cutthroat competition and fast-changing sentiment, share prices can easily fall even when the underlying business remains intact.
For dividend investors, that’s worth watching. Lower share prices may offer the chance to buy established tech companies at more attractive valuations while still collecting income along the way.
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With that in mind, I screened the S&P 500 Information Technology sector for dividend-paying stocks trading near oversold levels.
How I Came Up With These Stocks
Using Barchart’s Stock Screener, I selected the following filters to get my list:
Screenshot courtesy of: www.barchart.com
Annual Dividend Yield (%) FWD: Set at 0.1% to filter for companies that pay a dividend. Then, I will sort this column later from highest to lowest.
14-Day Relative Strength Index (RSI): An RSI of 30 is “oversold”, and higher than 70 is “overbought”. No stocks that meet the other criteria were below 30, so I expanded the cutoff to 40 or lower to identify stocks trading near oversold territory.
Percent From Low: Stocks trading within 5% of their one-month low suggest that shares remain near recent lows, helping confirm that the stock may be approaching oversold territory.
Number of Analysts: 12 or more. The higher the number, the better.
Current Analyst Rating: Stocks rated “Moderate” to “Strong Buy” by Wall Street.
Index Groups: S&P 500 Info Tech.
I ran the screen and got six results. I then arranged them from highest to lowest dividend yield, and will now cover the top three.
Screenshot courtesy of: www.barchart.com
Starting this list is:
Microchip Technology (MCHP)
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Microchip Technology is a semiconductor company that designs and manufactures microcontrollers, analog chips, and other embedded-control products used in everything from cars and industrial equipment to consumer electronics. Now, that might not sound as hot as “AI chips,” but the sheer range of industries Microchip Tech serves more than makes up for it.
It also has an AI business, though its focus is more on edge AI. That means bringing machine-learning models directly onto microcontrollers and microprocessors, running AI locally while reducing power consumption, latency, and reliance on a cloud connection.
Right now, Microchip stock is trading around 4% off its one-month low, while its RSI sits at 42%. If that sounds good, you might want to consider the company’s $1.82 annual dividend, which translates to around a 2.6% yield.
Screenshot courtesy of: www.barchart.com
Finally, Wall Street still sees potential in Microchip Technology, with a consensus among 26 analysts rating the stock a “Strong Buy” with as much as 84% upside potential.
NXP Semiconductors (NXPI)
Screenshot courtesy of: www.barchart.com
Next is NXP Semiconductors, a direct competitor of Texas Instruments in the semiconductor industry. It also develops chips and processing solutions that serve many of the same markets, with a stronger focus on the automotive sector.
Like Microchip, the stock is trading a little less than 4% above its one-month low, and its RSI of 41% suggests it is near-oversold. The company pays a forward annual dividend of $4.06, translating to a yield of approximately 1.8%.
Screenshot courtesy of: www.barchart.com
A consensus among 26 analysts rates NXPI stock a “Moderate Buy,” with as much as 77% potential upside over the next year.
Corning Inc (GLW)
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Finally, we have Corning Inc., a materials-science company that develops specialized glass, ceramics, and optical-fiber technologies. Its biggest growth driver right now is – you guessed it – AI data centers. These facilities need massive amounts of high-speed fiber-optic connectivity to move data between servers, racks, and data centers, creating a growing demand for Corning’s products.
That said, Corning’s stock is in a bit of a slump. It’s trading about 5% above its one-month low, and its 43% 14-day RSI suggests momentum still hasn’t recovered.
Now, if you’re willing to wait for a potential recovery, Corning pays $1.12 per share per year, translating to about a 0.77% yield.
Screenshot courtesy of: www.barchart.com
Lastly, analysts still see lots of upside. A consensus among 29 experts rates the stock a “Moderate Buy,” with a high target price about 50% above where it trades today.
Final thoughts
These three companies are prime examples of companies that have recently traded near their lows while continuing to build and compete in important areas of the semiconductor industry.
For investors, that may create an opportunity to buy into established tech names at cheaper-than-usual prices, with dividends adding another reason to take a closer look.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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