As investors prepare to enter 2026, the stock market’s impressive performance this year, with the S&P 500 index increasing by nearly 18%, stands out. This surge comes despite a significant 15% correction in April, suggesting a remarkable recovery and a notable 33% swing from the lows. The technology sector has played a pivotal role in this success, fueled largely by the surge of investment into artificial intelligence (AI) technologies, which has spurred optimism and growth across chips, data centers, and other related opportunities.
Although deep discounts in tech stocks are becoming more scarce, there remain some compelling choices for keen investors. Here are three noteworthy tech companies that are poised to deliver strong dividends and capital gains.
Microsoft has established itself as a stable powerhouse within the tech industry. Not just a relic of the past, its Microsoft Cloud segment, which includes well-known software products like Windows and Microsoft 365, is the backbone of its financial health. This segment posted a remarkable 26% revenue increase in the first quarter of its fiscal year. Furthermore, the burgeoning demand for AI solutions has significantly accelerated growth in its Intelligent Cloud segment, which also achieved a 28% year-over-year revenue rise, leading to a substantial annual run rate exceeding $120 billion. Azure’s revenue rose by an impressive 40%, further strengthening its position in the market.
With a current market valuation of approximately $3.6 trillion, Microsoft’s stock has appreciated about 15% in 2025. Analysts project earnings per share to reach $18.75 next year, leading to a price-to-earnings (P/E) ratio of 26. This evaluation is considered fair given the company’s expected long-term earnings growth rate of 16% to 17%.
Motorola Solutions, once synonymous with the cellphone market, has reinvented itself as a leader in communications technology for a variety of sectors, including law enforcement and education. The recent acquisition of Silvus Technologies for $4.4 billion positions Motorola Solutions to enhance its offerings in challenging communication environments where traditional networks fail. Analysts anticipate the company will see earnings growth of about 9% annually over the next three to five years.
With a market cap of $64 billion, Motorola Solutions currently trades at a P/E of 25, presenting a solid opportunity relative to its 10-year average P/E ratio of 32. This positions the stock as a reliable investment amid current market fluctuations.
Automatic Data Processing (ADP) has been a consistent performer for decades, offering essential payroll and human resource solutions. The company’s reliability is underscored by its status as a Dividend King, having increased its dividend for 50 consecutive years. With an average annual increase of 11.5% over the past decade, ADP’s dividends are likely to continue growing alongside its earnings, projected to rise by 9% annually.
Currently priced around $258.49, ADP’s stock is near its 52-week low and is valued at a P/E of 23 based on full-year earnings estimates, presenting an attractive buying opportunity for long-term investors.
In summary, despite the challenges of scouting for discounts in the technology sector, these three companies—Microsoft, Motorola Solutions, and Automatic Data Processing—afford investors promising options for both dividends and capital appreciation as they look ahead to 2026.
