3 Tech Dividend Stocks That Offer Income and Stock Price Growth Through AI

Tech investors have turned to artificial intelligence (AI) stocks for investment returns. Over the last four years, they have probably been happy to see many of these stocks earn outsized gains.

What investors may have forgotten is that some of these are also dividend stocks. Admittedly, some pay negligible dividends, while others have required investors to sacrifice stock price growth for higher dividend returns.

Fortunately, a few pay a dividend well above the S&P 500 average of 1.1% without sacrificing growth. Thanks to AI, these three stocks offer the potential for such gains.

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IBM

International Business Machines (NYSE: IBM) has revived its tech business in recent years by pivoting more heavily into the cloud. The 2019 acquisition of Red Hat made it a leading cloud company, and, like other similar companies, it later embraced generative AI.

Its watsonx platform allows users to build, scale, and administer AI models, and it develops foundation models called Granite. Other offerings include agentic AI, cloud and quantum integration, and AI consulting services.

This technology helps support a yearly dividend of $6.76 per share. IBM has increased that payout for 31 straight years, and even with the AI-driven growth, it yields 2.7%. The increases are on track to continue, as it generated over $15 billion in free cash flow over the last year, well above the $6.3 billion it paid in dividends.

Admittedly, IBM is a slower-growing company, and its third-quarter revenue of $17 billion increased by only 5%. Moreover, even though the company has generally tracked the performance of the S&P 500 since CEO Arvind Krishna took over in 2020, it is down over the past year.

However, with a price-to-earnings (P/E) ratio of 21, the stock sells at an attractive valuation. With the stock and the dividend likely to continue rising, these conditions should continue to make IBM stock a buy.

Digital Realty Trust

Digital Realty Trust (NYSE: DLR) is a real estate investment trust (REIT) operating data centers. Although this is technically a real estate stock, it has capitalized on the data center construction boom. The REIT is in a strong position, as insatiable industry demand provides it with a large customer base.

Demand is such that Digital Realty suspended payout hikes in 2022, probably to devote more capital to expansion. Still, at an annual dividend of $4.88 per share, it offers a dividend yield of 2.9%. Moreover, considering its $8.27 per share in diluted funds from operations (FFO) income over the trailing 12 months, it can likely afford its payout.

Furthermore, amid the boom, revenue continues to grow. In the first half of 2026, revenue of $1.9 billion rose by 29% compared to year-ago levels.

While Digital Realty stock made only modest gains over the last five years, it has nearly doubled from its 2023 low. That took its P/E ratio to 83, but considering the REIT sells for just 21 times its FFO income, it may not be as expensive as the earnings multiple implies.

Ultimately, assuming demand for data center capacity remains high, Digital Realty should continue to make steady gains and generate meaningful dividend income for its shareholders.

Cisco

Cisco Systems (NASDAQ: CSCO) is another company benefiting from the data center boom. Its stock struggled for decades as the dot-com bust and shifting technologies reduced demand for its telecom equipment.

The stock's recovery did not truly take off until last year when the AI infrastructure boom drove up demand for Cisco's networking, optics, and silicon offerings. Additionally, the company has become more successful in selling subscriptions for its security and observability software, providing it with recurring revenue.

Cisco introduced a dividend in 2011 when the current boom was still years away. The payout has increased annually, now totaling $1.68 per share yearly. That gives it a yield of 1.6%. The dividend cost Cisco just under $6.6 billion in fiscal 2026 (ended July 25). Since the company generated almost $13 billion in free cash flow over the same period, it should be able to maintain and increase the payout.

Furthermore, thanks to the aforementioned data center-driven demand, Cisco is firmly in growth mode. Its $17 billion in revenue in fiscal Q4 rose by 18% year over year. That revenue increase has likely helped the stock's performance. Even with a recent pullback, Cisco has still risen by nearly 50% over the last year. That activity raised the P/E ratio to 31, but with the forward P/E ratio now down to 20, Cisco stock is likely to remain a draw for AI investors.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems and International Business Machines. The Motley Fool recommends Digital Realty Trust. The Motley Fool has a disclosure policy.