The markets are becoming increasingly worried about a possible recession due to the uncertainty surrounding the new US trade policies.
Dividend stocks are often a good choice during times of economic slowdowns. They offer a cushion against possible losses.
Morgan Stanley strategists have identified the top two US tech stocks in a good position to pay dividends in 2025.
Twilio Inc (NYSE: TWLO)
Morgan Stanley believes Twilio is in a great position to begin paying dividends this year, as its current free cash flow yield is a solid 4,7%.
Twilio’s shares have fallen more than 30% in value since mid-February, amidst the US tech stock crash triggered by tariffs.
The investment firm recently told its clients that they should take advantage of the current price drop, as the risk/reward ratio for this quality brand is quite attractive.
Meta Marshall, the analyst at TWLO, has now upgraded TWLO to “overweight”. Her newly revised price target of $150 indicates a potential upside of over 55% for shares of the cloud communication company.
Marshall sees “opportunity both for multiple expansion and estimate revise” as Twilio continues its use of artificial intelligence to drive innovation.
She also expects that improved cross-selling will unlock further significant upside in TWLO’s shares.
Morgan Stanley’s recent note referred to the continued weakness of cloud stocks as “overdone”, primarily because the company improved its sales and narrowed its losses in its latest reported quarterly report.
Twilio’s stock is nearly 100% higher than its 52-week-low at the time this article was written.
Okta Inc (NASDAQ: OKTA)
Morgan Stanley also sees Okta Inc., based in San Francisco, as a tech company that is well-positioned for dividend payments to begin this year.
The identity and access management company is currently enjoying a free cash flow yield of around 5.4%.
The investment firm expects OKTA’s first dividend to be announced in 2025, also because the company is doing well financially.
In March, the Nasdaq listed company reported results that exceeded expectations for its fourth-quarter and also provided guidance that was above expectations.
Morgan Stanley expects Okta’s growth to accelerate as “renewal headwinds subside, go-to-market strategy is further refined, and new products continue gaining traction.”
The stock price movement for the company shows that it is able to navigate a new tariff environment and a possible recession.
Okta shares have risen nearly 45% since the beginning of 2025, despite the recent struggles of most tech stocks.
It is worth noting that other Wall Street analysts share Morgan Stanley’s positive outlook, as the consensus rating for Okta Inc is currently “overweight”.
This post Two US Tech Stocks on the Verge of Initiating Dividends: Here’s What to Watch may be modified based on new developments.
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