when you think NVIDIA (NVDA 1.86%)Dividends are probably not one of the things that come to mind. But given how much earnings the company makes and how much room it has to grow its dividend, this could change in the future. Apple And Microsoft There are two top tech companies that have been paying and increasing their payouts for years.
Nvidia, with some deep potential and great growth prospects, could be an even more interesting option in the future. Recently, it announced a huge increase in its dividend. Could this be a sign that it’s getting more serious about its dividend, and could that make the stock a more attractive option? income investor?
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Nvidia’s dividend increased by 2,400%
Nvidia’s dividend has been fairly nominal so far, just one percent. But the recently announced dividend will be much more significant – $0.25. That is an increase of 2,400%. At $1 a year in dividends per share over the course of a year, that yields about 0.47%. It’s still well shy S&P 500 Averaged 1.1%, but that’s now higher than Apple (which has a yield of 0.35%) and not far behind Microsoft’s yield of 0.87%.
In 2024, Nvidia’s dividend technically increased by 900% due to a 10-for-1 stock split. It can’t be denied that Nvidia could increase its dividend further, given how strong its earnings are; In its most recent quarterly results, the company’s diluted earnings per share totaled $2.39 and could easily cover a year’s dividend payment. With a modest payout ratio, Nvidia’s strong financial position may enable it to grow its dividend at higher rates in the near future, but that doesn’t mean it will.
today’s change
(-1.86%) $-4.09
current price
$215.42
key data points
market cap
$5.2T
day limit
$214.84 -$221.07
52wk range
$132.92 -$236.54
volume
5.8M
average volume
171.3m
gross margin
74.15%
dividend yield
0.02%
Why a big dividend increase may not be ideal for Nvidia
Tech companies typically rely more on share buybacks rather than dividends when it comes to rewarding their shareholders. Although highly profitable businesses like Apple and Microsoft have the ability to make more generous increases in their payouts, they don’t. Dividend payments can create obligations and expectations that prevent the company from focusing on growth. Nvidia’s recent rise may be aimed at putting its yield in line with other tech stocks rather than signaling its transformation into a top dividend growth stock.
Nvidia is primarily a stock that would be suitable for growth investors. While yield is a nice bonus, this is the best way to look at it, as most of the returns you’ll get from Nvidia stock will come from it. rising share priceInstead of the modest dividend income you get from it.
David Jagielski, CPA No positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has one Disclosure Policy.