3 Tech Stocks for Growth and Income: The Split Matters

Most articles with that title are going to hand you the same three names - Apple, Microsoft, Broadcom - and call it a day. Apple's 0.34% dividend yield isn't income; it's a rounding error. You'd need to own $29,000 of Apple just to get $100 a year. That's a growth stock that happens to have a dividend, not an income stock.

The "growth and income" label only works if you're honest about which name is carrying the growth and which is carrying the income. The three names below actually bridge the gap, but they do it in fundamentally different ways. Each has a distinct portfolio role, a distinct factor profile, and a distinct risk you need to track.

1. Microsoft (MSFT): Growth Engine, Dividend That Compounds

Microsoft just closed fiscal 2026 with revenue was $331.8 billion and increased 18%, up 18% for the year, and a final quarter that topped expectations across the board. Azure revenue growth rose 43% in its fiscal fourth quarter, and Microsoft Cloud revenue reached $59.3 billion, up 27% year-over-year. Annual Azure revenue passed $100 billion for the first time. Microsoft 365 Copilot reached over 30 million paid seats.

That's the growth side. The income side is smaller but structured to last. The dividend yield is 0.77% - modest, but the payout ratio sits at just 20.7% of earnings, and Microsoft has increased its dividend for 19 consecutive years. The company returned $10.2 billion to shareholders in dividends and share repurchases last quarter alone.

Factor profile: At 25.8x trailing earnings and a forward P/E of 33.9x, Microsoft is expensive by historical standards but earns it. The PEG ratio of 0.82 signals the growth rate justifies the multiple. Operating margins of 46.8%, an ROIC of 28.3%, and $67 billion in free cash flow over the trailing twelve months put Microsoft in the top tier for quality. The balance sheet carries $316 billion in debt but $21 billion in cash, with a net-debt figure that is actually negative after cash adjustments. Debt-to-equity of 9.1% is exceptionally clean for a company of this scale.

The portfolio role: Growth sleeve anchor. Microsoft is not here for yield - the dividend is a compounding feature, not an income engine. It belongs in the part of the portfolio that needs to stay positioned for AI infrastructure adoption without requiring binary all-or-nothing bets. The trigger to reduce would be Azure growth falling below 25%, which would break the PEG justification.

What's the risk: The $190 billion capital expenditure guidance for calendar 2026 is staggering. Capacity constraints forced Microsoft to choose between powering its own Copilot service and renting Azure capacity to customers - a real tension if demand outpaces supply through year-end. But the 43% Azure print suggests the tension is easing, not worsening.

2. Broadcom (AVGO): The AI Custom Silicon Play With a Token Dividend

Broadcom's growth numbers are the most aggressive on this list. Revenue grew 32.3% year-over-year, with AI semiconductor revenue hitting $10.8 billion in its latest quarter - up 143%. The company has six confirmed custom chip customers including Google, Meta, Anthropic, and OpenAI, with supply agreements extending into 2028. Q3 revenue guidance of $29.4 billion, above the $28.5 billion consensus, projects AI chip revenue of $16 billion in a single quarter, up 200% year-over-year.

The dividend yield is 0.65%. That's not income either - but Broadcom's dividend has grown for nine consecutive years, and the company generates free cash flow margins of 43.4%, the highest on this list. Free cash flow grew 44.4% year-over-year to $32.8 billion. The payout ratio is 40%, well above Microsoft's but sustainable given the FCF engine.

Factor profile: This is the most valuation-stretched name here. Broadcom trades at 63.2x trailing earnings and a staggering 95.1x forward P/E. The PEG ratio of 0.51 technically justifies it - the growth rate is so explosive the multiple hasn't kept up mathematically - but forward P/Es above 90x leave almost no room for a guidance miss. ROE of 37.3% and operating margins of 43.4% are elite. The 74% debt-to-equity ratio reflects the VMware acquisition and is the highest leverage on this list, though the quick ratio of 201% shows ample liquidity.

The portfolio role: AI growth sleeve, concentrated bet. Broadcom belongs where you want exposure to the custom silicon thesis - the idea that hyperscalers are moving away from off-the-shelf GPUs toward purpose-built accelerators. This is not a barbell hedge name; it's the growth end of the spectrum.

What's the risk: VMware. Infrastructure software revenue of $7.18 billion in the last quarter missed the $7.32 billion consensus. That segment carries 93% gross margins and a 79% operating margin - it's the cash engine that funds Broadcom's AI roadmap. Software growth decelerated from 1% in Q1 to 9% in Q2, which looks like improvement on the surface but followed a segment that had been flatlining. A sustained VMware slowdown changes the entire funding equation. Watch Q3 software revenue when it reports. If it misses again, the valuation premium for the AI business gets scrutinized harder.

3. Texas Instruments (TXN): The One That Actually Qualifies as Income

Texas Instruments is the only name on this list where "income" isn't a polite fiction. The dividend yield is 2.54%, and TI has raised its dividend for 13 consecutive years. That's real income territory.

But the growth story has also reaccelerated. Revenue grew 16.7% year-over-year, with Q2 revenue climbing 23% to $5.5 billion. The Q3 guidance - $5.65 billion to $6.15 billion versus consensus of $5.61 billion - signals industrial demand is recovering. Free cash flow growth of 256% year-over-year is the strongest cash-generation acceleration on this list. ROIC of 20.5% and ROE of 35.1% are solid.

Factor profile: At 41.7x trailing earnings and 51.2x forward, TXN is not cheap. But the PEG ratio of 2.09 is the weakest on this list, and that's a warning sign - the growth isn't stretching to justify the multiple the way Broadcom's does. The stock has surged 58.9% year-to-date and is up 24.5% over the last 120 days, suggesting much of the recovery thesis is already priced in. The balance sheet shows 78% debt-to-equity, elevated for an analog chipmaker, though the current ratio of 486% and free cash flow surge provide cushion.

The income problem: The dividend payout ratio sits at 94.2% of trailing earnings. That is dangerously high. TI is paying out nearly all its earnings as dividends. Any earnings softness - a cyclical dip in industrial demand, for example - would force a choice between cutting the dividend or finding cash from the balance sheet. The payout ratio is the single number that matters most for TXN, and it's flashing a yellow light.

The portfolio role: Income sleeve with growth upside. TXN belongs where you want yield plus a shot at the industrial and AI analog recovery - it's the barbell hedge name that pairs with Broadcom's pure-growth profile. It hedges against an AI slowdown because its revenue base (automotive, industrial, embedded processing) is cyclical and diversified, not hyperscaler-dependent.

What to watch: The 94% payout ratio and whether Q3 actuals confirm the beat-and-raise trajectory. If industrial demand holds, the story has legs. If the analog recovery stalls, that payout ratio becomes a problem fast.

How They Fit Together

These three don't play the same role. Microsoft is the growth anchor - you hold it for Azure and Copilot penetration, and the dividend is a bonus that compounds over years. Broadcom is the concentrated AI growth bet - custom silicon with explosive numbers but fragile valuation tolerance. Texas Instruments is the income name with unexpected growth reacceleration - the 2.54% yield is real, and the industrial recovery gives it an upside option.

Together, they form a split: Microsoft and Broadcom on the growth end, TXN providing actual yield on the other. That's closer to a functional barbell than most "growth and income" lists pretend to deliver. The one to watch most closely is TXN's payout ratio - it's the only structural weakness on this list that could turn a growth story into a dividend cut.

If you're looking for income and someone hands you a list where the highest yield is 0.77%, you're not being sold income. You're being sold growth with a dividend label stapled on. The three names above actually bridge the gap - but only if you understand which one is doing the growing and which one is doing the paying.