ASX tech stocks aren't well known for their dividend prowess. When Australian investors want dividends, they tend to buy stocks like Westpac Banking Corp (ASX: WBC) or Telstra Group Ltd (ASX: TLS), not WiseTech Global Ltd (ASX: WTC) or Xero Ltd (ASX: XRO).
Yet some ASX tech stocks have some of the most impressive dividend metrics you can find on our share market. Remember, a company's dividend yield at any given moment doesn't tell us everything about its income potential. That's why I want to talk about TechnologyOne Ltd (ASX: TNE) today.
Software provider TechnologyOne is one of the most exciting technology stocks on the ASX. It has had a bit of a bumpy ride over the past 12 months, with the company's shares going as high as $42.88 in June last year to as low as $20.14 three months ago.
This ASX tech stock has been in the news this week after delivering an out-of-season earnings report on Tuesday, covering the six months to 31 March. As we covered at the time, it was a fairly well-received report. TechnologyOne unveiled a 17% increae in annual recurring revenue to $598 million, as well as a 9% bump in profits before tax to $89.1 million.
But let's talk dividends.
An ASX tech stock and a dividend heavyweight?
At first glance, TechnologyOne shares don't look too compelling from an income perspective. The company is presently (at the time of writing) trading on a trailing dividend yield of 0.96%. Better than nothing, sure, but seemingly not much to write home about.
That may seem the case until you dig a little deeper. On Tuesday, this ASX tech stock announced that its next interim dividend payment would be worth 8 cents per share, partially franked at 75%. That happens to be a record interim dividend for TechnologyOne, representing a whopping 21.2% increase over 2025's interim dividend of 6.6 cents per share.
Together with last year's final dividend worth 20 cents per share, the company now has an annual ordinary dividend total of 28 cents per share. That rises to 38 cents if we include the special dividend that TechnologyOne also doled out in December.
Even if we are conservative and take the 28 cents figure, TechnologyOne still increased its annual payouts by 16.8% over the past 12 months. It's a healthy growth rate, and slightly exceeds the 16% average annual dividend hike that, as we discussed last year, the company achieved between 2016 and 2025 (that includes special dividends as well).
If this ASX tech stock can keep up this dividend growth rate, it will prove to be an income heavyweight on the ASX for existing investors in just a few years.
The post This ASX tech stock just raised its dividend by 21% appeared first on The Motley Fool Australia.
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Telstra Group, WiseTech Global, and Xero. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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