Hewlett Packard Enterprise's Q3 Performance and Dividend Resilience: Assessing Long-Term Value in a Shifting Tech Landscape

The post-pandemic enterprise technology sector has been a study in contrasts: rapid innovation in artificial intelligence and digital transformation coexists with macroeconomic headwinds and supply chain fragility. Hewlett Packard Enterprise (HPE), a key player in this evolving landscape, has navigated these challenges with a mix of operational discipline and strategic focus on shareholder returns. Its Q3 2023 results, coupled with recent dividend resilience, offer a lens through which to evaluate its long-term value proposition and risk profile.

Q3 2023 Financial Performance: Modest Growth Amid Sector Downturns

HPE reported Q3 2023 revenue of $7.0 billion, a 1% increase from the prior-year period, outperforming expectations in a sector marked by contraction. For context, Intel’s 2023 annual report noted an 8% decline in its Client Computing Group revenue due to reduced demand for notebooks and desktops [7], suggesting HPE’s resilience is notable. Non-GAAP diluted net earnings per share (EPS) rose 2% to $0.49, exceeding guidance, while free cash flow surged by $368 million to $955 million [1]. This performance underscores HPE’s ability to optimize operations in a challenging environment, though the modest revenue growth hints at broader market saturation in traditional hardware segments.

Dividend Resilience: A Conservative but Sustainable Payout

HPE’s dividend strategy has remained a cornerstone of shareholder value. The company declared a $0.12 per-share dividend in Q3 2023 [1], maintaining a consistent payout that has grown by an average of 4% over the past year [2]. As of June 2025, its annual dividend of $0.52 per share yields approximately 2.3–2.92%, depending on valuation metrics [2]. A 50.45% payout ratio [2] suggests a conservative approach, balancing reward for shareholders with reinvestment capacity—a critical trait in a sector where capital expenditures for AI infrastructure are rising.

However, comparisons with HP Inc., HPE’s sibling company, reveal divergences. HP Inc. returned $0.9 billion to shareholders in Q3 2024 through dividends and buybacks, with a $0.2756 per-share dividend [2]. While HPE’s payout is smaller, its focus on enterprise solutions—versus HP’s consumer-centric Personal Systems segment—positions it differently in the value chain.

Risk Factors: Volatility and Structural Challenges

HPE’s risk profile remains complex. As of Q1 2025, 44% of its 32 identified risks fell under Finance & Corporate, including share price volatility driven by macroeconomic factors like inflation and geopolitical tensions [3]. The company’s historical spinoffs, such as the Enterprise Services and Software segments, have also introduced tax-related risks, with potential IRS challenges to prior rulings [3].

Yet, HPE’s credit profile offers some reassurance. While HP Inc.’s credit rating was downgraded to B1 in 2022 amid inflationary pressures, it rebounded to A2 by 2023, reflecting effective financial management [4]. This trajectory suggests HPE, which shares a corporate lineage with HP Inc., may possess similar resilience in navigating credit risks.

Industry Trends: Growth in AI and Enterprise Mobility

The broader enterprise tech sector is undergoing a transformation. The BYOD and Enterprise Mobility market, valued at $72.7 billion in 2024, is projected to reach $133.9 billion by 2029 [5], driven by digital transformation. Simultaneously, the AI market is expected to expand from $294.16 billion in 2025 to $1,771.62 billion by 2032, with a 29.2% CAGR [6]. These trends align with HPE’s strategic focus on hybrid cloud and AI infrastructure, though the company must contend with rising tariffs on AI hardware and global sourcing complexities [6].

Conclusion: Balancing Growth and Prudence

HPE’s Q3 2023 results and dividend resilience highlight its ability to generate stable returns in a volatile sector. While its revenue growth is modest, the company’s focus on free cash flow generation and conservative payout ratios positions it to weather macroeconomic shocks. However, investors must weigh these strengths against structural risks, including share price volatility and tax uncertainties.

In the long term, HPE’s exposure to AI and enterprise mobility offers upside potential, provided it can scale its offerings without compromising operational efficiency. For now, the company appears to strike a prudent balance between growth and prudence—a rare virtue in the high-stakes world of enterprise tech.

Source:
[1] Hewlett Packard Enterprise reports fiscal 2023 third quarter results [https://www.hpe.com/us/en/newsroom/press-release/2023/08/hewlett-packard-enterprise-reports-fiscal-2023-third-quarter-results.html]
[2] HP Inc. Reports Fiscal 2024 Third Quarter Results [https://www.hp.com/us-en/newsroom/press-releases/2024/hp-inc-reports-fiscal-2024-third-quarter-results.html]
[3] Hewlett Packard Enterprise (HPE) Stock Risk Analysis [https://www.tipranks.com/stocks/hpe/risk-factors]
[4] HP (HPQ) [https://martini.ai/pages/research/HP-36c53f13a1c59e27aa59667c3f44c96d]
[5] BYOD and Enterprise Mobility Market Size & Share Analysis [https://www.marketsandmarkets.com/Market-Reports/enterprise-mobility-334.html]
[6] Artificial Intelligence [AI] Market Size, Growth & Trends [https://www.fortunebusinessinsights.com/industry-reports/artificial-intelligence-market-100114]
[7] intc-20231230 [https://www.sec.gov/Archives/edgar/data/50863/000005086324000010/intc-20231230.htm]