Should You Buy the 2 Highest-Paying Dividend Stocks in the Nasdaq-100?

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Intro

💡 Invest in companies you believe in - W. Buffett

Dividend investing is a popular strategy for generating passive income, especially in uncertain markets. While the Nasdaq-100 is typically associated with high-growth tech stocks, it also includes companies that pay substantial dividends—with PACCAR (PCAR) and Microchip Technology (MCHP) currently leading the pack in yield. But a high dividend payout alone doesn’t always make a stock a good investment.

Before adding these names to your portfolio, it’s essential to examine their financial strength, payout sustainability, and growth prospects. PACCAR, a heavyweight in the truck manufacturing industry, has a long history of steady dividends, but how does it fare in an evolving auto market?

Meanwhile, Microchip Technology, a semiconductor leader, benefits from strong industry tailwinds—but does its dividend keep up with its cyclical business risks?

1. PACCAR Inc (NASDAQ: PCAR)

PACCAR Inc (NASDAQ: PCAR) is a global technology leader in the design and manufacturing of premium commercial trucks under the renowned brands Kenworth, Peterbilt, and DAF, as well as a developer of diesel engines and provider of financial services for the transportation industry.

Founded in 1905, the company has a rich history, evolving from railway equipment manufacturing into one of the world's largest producers of heavy-duty trucks, currently ranking third globally behind Daimler Truck and Volvo Trucks.

PACCAR is a favorite among investors due to its consistent financial performance, reporting 31.6 billion in revenue (2024) and 4.16 billion in net income (2024). The company is a key component of major indices like the Nasdaq-100 and S&P 500, highlighting its market significance. Additionally, PACCAR is known for its reliable dividend policy—in April 2025, it announced yet another quarterly payout, reinforcing its appeal to income-focused investors.

Key strengths of PACCAR include its extensive global dealer network (2,200 locations), in-house engine manufacturing, and a strong parts division, which contributes 21% of total revenue. The company is also at the forefront of sustainability initiatives, investing in fuel-efficient and low-emission truck technologies to meet evolving environmental standards.

History of the Company

PACCAR's roots trace back to 1905 when William Pigott Sr. founded Seattle Car Manufacturing Company, initially producing railroad and logging equipment. The company entered the truck business in the 1940s after acquiring Kenworth (1945) and later Peterbilt (1958), establishing itself as a major player in North America's heavy-duty truck market.

Its global expansion accelerated in the 1970s with the launch of DAF Trucks in Europe, followed by strategic acquisitions in Australia and South America. A pivotal moment came in 1996 when PACCAR introduced its proprietary MX-series engines, reducing reliance on third-party suppliers. Recognized for innovation, the company pioneered aerodynamic truck designs and advanced telematics systems.

Today, PACCAR operates across 4 continents, ranking among Fortune 500 companies with uninterrupted dividends since 1941 – a testament to its century-long evolution from regional manufacturer to multinational industry leader.

A Dividend Powerhouse With Staying Power

PACCAR stands out as a rare dividend player in the industrial sector, boasting an 82-year streak of uninterrupted dividends since 1941 – a track record few companies can match. The company has not only maintained but grown its payouts, with dividends increasing at a 7.5% CAGR over the past decade, supported by its resilient business model and strong cash flows.

Even during industry downturns, PACCAR's conservative payout ratio (30-35% of earnings) and fortress balance sheet (5.2B cash reserves )have ensured dividend safety. Its recent 1.00 per share quarterly dividend (2.1% yield) comes alongside special dividends in boom years, like the $3.20 extra payout in 2023 when truck demand surged.

What makes PACCAR truly exceptional is its ability to combine dividend growth with capital appreciation – shares have delivered a 15% annualized total return since 2000, proving that disciplined capital allocation can reward both income and growth investors alike. This dual advantage cements PACCAR's status as a blue-chip dividend compounder in the transportation sector.

Financial Statement

If you want to stay on top of your portfolio's health, don't forget to check in on the financials of the companies you've invested in. The better shape they’re in, the better your results will be. Keep an eye on their quarterly and annual reports to see how they're performing.

Here is a quick dive into PACCAR Inc over last years

The strongest and most stable companies tend to have a Financial Score of 80+, with the very best ones hitting 90+. If you see that score start to dip below 80, that’s your cue to consider jumping ship before things get worse.

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Future Growth Prospects for PACCAR Inc.

PACCAR is strategically positioned for long-term growth, driven by several key industry tailwinds and company-specific initiatives.

The global shift toward alternative fuel vehicles presents a significant opportunity, with PACCAR already rolling out battery-electric trucks (like the Kenworth T680E and Peterbilt 579EV) and investing in hydrogen fuel cell technology through partnerships with Toyota and other leaders.

The company's $3.1 billion R&D budget (2023-2025) underscores its commitment to maintaining technological leadership in an evolving transportation sector.

Geographic expansion represents another growth vector, particularly in emerging markets where infrastructure development is accelerating demand for heavy-duty trucks. PACCAR's DAF division continues gaining market share in Europe (now at 17.3%), while its growing presence in South America and Asia-Pacific positions it to capitalize on global freight volume growth, projected to increase 3.5% annually through 2030.

The company's aftermarket parts and services business (21% of revenue) provides a high-margin, recurring revenue stream that's expected to grow as PACCAR's installed vehicle base expands. Digital initiatives like the PACCAR Connect telematics platform are creating new service revenue opportunities while improving customer retention.

With industry analysts projecting 5-7% annual revenue growth for PACCAR through 2027 (versus 3-4% market average), the company appears well-positioned to maintain its premium valuation while continuing its tradition of shareholder returns through both dividends and potential special payouts during cyclical upturns.

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2. Microchip Technology Inc (NASDAQ: MCHP)

Microchip Technology Inc (NASDAQ: MCHP) is a leading semiconductor company specializing in microcontrollers (MCUs), analog chips, and connectivity solutions for embedded control systems across industries.

Headquartered in Chandler, Arizona, the company has become synonymous with reliable, low-power computing solutions, serving over 125,000 customers globally in automotive, industrial, data center, and consumer markets.

Microchip stands out for its diversified product portfolio (over 18,000 SKUs) and focus on long-lifecycle chips, making it a preferred supplier for mission-critical applications where durability matters.

The company's 8-bit, 16-bit, and 32-bit PIC® MCUs are industry staples, while its recent expansion into AI-accelerated edge computing and secure connectivity solutions positions it for next-gen IoT growth.

Popular among investors for its capital-efficient "fab-lite" model and consistent free cash flow generation (averaging $2B annually), Microchip has delivered 23 consecutive years of dividend growth, earning it Dividend Eagle 🦅 status.

Its 3.2% dividend yield (as of 2024) and disciplined M&A strategy—including the strategic acquisition of Microsemi in 2018—make it a unique blend of growth and income in the semiconductor space. With chips now embedded in everything from smart factories to electric vehicles, Microchip’s technology forms the invisible backbone of the digitized economy.

History of the Company

Founded in 1989 through a spin-off from General Instrument Corporation, Microchip Technology began as a niche player focused on PIC® microcontrollers—a revolutionary architecture that simplified embedded system design.

The company's breakthrough came in the 1990s with its 8-bit flash-memory MCUs, which became industry standards for cost-sensitive applications. Through strategic acquisitions—including SST (2010), Micrel (2015), and Microsemi (2018)—Microchip transformed from a microcontroller specialist into a diversified semiconductor powerhouse.

Key milestones include pioneering low-power chips for battery-operated devices (early 2000s), becoming the first MCU vendor to achieve ISO/TS 16949 automotive certification (2006), and its 2016 transition to 32-bit ARM®-based MCUs, expanding into high-performance computing.

Today, Microchip’s chips enable everything from NASA’s Mars rovers to smart home devices, with its 2023 revenue reaching $8.4 billion. The company’s "technology longevity" philosophy—supporting products for decades—has cemented its reputation as the semiconductor industry’s most reliable partner for embedded control solutions.

A Proven Dividend Eagle 🦅

Microchip Technology (MCHP) has soared as one of the semiconductor industry's most reliable dividend performers, achieving Dividend Eagle status with 23 consecutive years of dividend growth—a rare feat in the cyclical chip sector.

The company's disciplined "25/25" financial model (targeting 25% operating margins and 25% free cash flow conversion) fuels its consistent payout increases, with dividends growing at a 10.3% CAGR since 2001.

Unlike peers that slash payouts during downturns, Microchip has never reduced its dividend, even during the 2008 financial crisis and 2020 pandemic.

Financial Statement

Here is a quick dive into Microchip Technology over last years

Future Growth Prospects for Microchip Technology

Microchip Technology is well-positioned for sustained growth, driven by increasing demand for semiconductors in key sectors such as automotive, industrial automation, IoT, and 5G.

The rise of electric vehicles (EVs), advanced driver-assistance systems (ADAS), and smart manufacturing will further boost the need for reliable microcontrollers and analog chips. Additionally, the expansion of AI and edge computing presents new opportunities for embedded solutions.

Strategic acquisitions, strong R&D investments, and a focus on energy-efficient designs enhance Microchip’s competitive edge. However, supply chain resilience and geopolitical factors remain critical challenges.

Overall, the company is expected to benefit from long-term industry trends, ensuring steady revenue growth and market leadership in specialized semiconductor segments.

Final Thoughts

PACCAR (PCAR) and Microchip Technology (MCHP) represent two compelling – yet distinctly different – approaches to high-yield investing within the Nasdaq-100.

PACCAR offers cyclical strength and industrial durability, with its 82-year dividend streak proving its ability to navigate economic downturns while rewarding shareholders through special dividends during boom cycles.

Microchip, meanwhile, brings tech-sector growth with Dividend Eagle reliability, combining semiconductor innovation with 23 years of uninterrupted dividend growth – a rarity in its industry.

For income-focused investors, both stocks deliver above-average yields (2.1% and 3.2% respectively) that stand out in the tech-heavy Nasdaq-100. PACCAR suits those seeking tangible asset backing and economic recovery plays, while Microchip appeals to investors wanting tech exposure with dividend safety.

Ultimately, this duo demonstrates that high yields in the Nasdaq-100 don’t require sacrificing quality. PACCAR’s best-in-class trucking margins and Microchip’s cash-generating fab-lite model both provide fundamental support for their payouts.

While neither stock is without risks – PACCAR faces cyclical demand swings, Microchip semiconductor volatility – their capital discipline, sector leadership, and multi-decade payout histories make them worthy candidates for diversifying a dividend portfolio beyond traditional income sectors.

The Verdict: Conservative investors might prefer Microchip’s consistent growth trajectory, while those comfortable with cyclicality could favor PACCAR’s special dividend potential. Together, they offer a balanced blend of industrial and tech income streams in an index better known for growth than yield.

Max’s Note

To your wealth, MaxDividends Team

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