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The tech sector has been the darling of the stock market for the past couple of decades, and it’s easy to see why when you compare its performance to other sectors. In the past 10 years alone, the S&P 500‘s tech sector has surged more than 480%, compared to the overall S&P 500’s roughly 150%.

Despite the stock price growth tech stocks are known for, they can also be great dividend stocks, offering above-average yields. Here are three high-yield tech stocks that can be good buys for October.

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1. Qualcomm

Qualcomm (NASDAQ: QCOM) is a semiconductor company that I would argue is underrated in its importance to the digital world as we know it today. This is particularly true regarding wireless technology because Qualcomm’s chips have been vital to many smartphones, tablets, laptops, and wearables.

Unlike many other big tech companies, Qualcomm’s stock hadn’t had a great year until late October. On Oct. 25, Qualcomm’s stock was down more than 2% in 2023. Since then, it’s surged over 20% (as of Nov. 14).

Qualcomm’s quarterly dividend is $0.80 per share, with a trailing-12-month (TTM) yield of 2.9%. It’s increased its annual dividend for 21 consecutive years and is likely to continue that trend. Qualcomm’s dividend payout ratio is only 47%, so the company has plenty of breathing room to continue its dividend increases without jeopardizing other parts of its business.

When Qualcomm reported its Q4 fiscal year (FY) 2023 revenue and non-GAAP (generally accepted accounting principles) earnings per share, they were down 24% and 35% year over year (YOY), respectively. However, both managed to beat analysts’ expectations. Considering the slowdown in smartphone sales, the YOY drops were to be expected.

Luckily, the worst of this downturn seems to be behind the company, as its chip sales continue to grow steadily. As 5G technology continues to expand, Qualcomm’s long-term prospects look promising because it has the chance to be a vital part of building the infrastructure.

2. Cisco Systems

Cisco Systems (NASDAQ: CSCO) came to prominence thanks to its hardware products’ role in today’s tech ecosystem. It’s the premier manufacturer of networking equipment like switches, routers, network security devices, and a handful more.

Although hardware is Cisco’s core product, the company is expanding its service and software offerings. In FY23 (ended July 29), Cisco’s service segment made $13.9 billion in revenue, 24% of its total revenue. It generated almost $17 billion in software revenue, of which 84% was subscription-based.

One benefit of focusing on software and subscription offerings is that recurring revenue makes earnings more predictable and stable than one-off hardware purchases.

One of Cisco’s more aggressive moves in this “transformation” is its recent $28 billion acquisition of cybersecurity company Splunk. This move will make Cisco a more formidable player in a cybersecurity space that’s expected to eventually grow to a $1.5 trillion to $2 trillion total addressable market, according to McKinsey. Even having 0.1% of that is $1.5 billion to $2 billion in opportunity.

Cisco is a shareholder-friendly company. Of the $19 billion in free cash flow made in its FY23, it spent $10.5 billion for dividends and share buybacks. That’s enough to sustain its above-average dividend, as well as keep cash to put toward growth. Its current dividend yield is close to 3%.

3. AT&T

AT&T (NYSE: T) has been a pain in many of its investors’ sides for quite some time. There’s plenty of blame to go around for why, but luckily, investing is about the future, and things are looking brighter for the telecom giant.

Its stock is lagging but got a much-needed boost, increasing more than 9% since its Q3 earnings report was released. Revenue was only up 1% YOY, but its free cash flow stood out, particularly because AT&T’s debt has been a pinpoint for its investors over the past handful of years.

Its free cash flow was $5.2 billion in Q3, bringing the total to $10.4 billion this year — almost $2.4 billion more than through the first three quarters of 2022. This puts AT&T in a good position to lower its debt.

There’s no way to predict the bottom for AT&T’s stock, but encouraging finances and growth opportunities with 5G make it a great option at current valuations. Meanwhile, the company’s dividend is one of the highest in the S&P 500, with a yield surpassing 7%.

AT&T’s business upside (and necessity) make it a stock worth considering for long-term investors.

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Stefon Walters has no position in any of the stocks mentioned. The Motley Fool recommends Cisco Systems, Qualcomm, and Splunk. The Motley Fool has a disclosure policy.

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