Nvidia (NASDAQ: NVDA) is the world’s leading provider of advanced processors for artificial intelligence (AI) and data center applications. Strong demand for its graphics processing units (GPUs) has helped boost its share price massively in the past couple of years, including a gain of roughly 156% so far across 2024’s trading.
With a market capitalization of roughly $3.12 trillion as of this writing, it’s also the world’s second-largest company — trailing behind only Apple. And with Nvidia stock delivering such impressive share price gains, it’s easy to overlook that it also pays a dividend.
Yes, Nvidia is a dividend stock (but just barely)
The fact that Nvidia receives little attention as a dividend stock isn’t surprising. The company’s quarterly payout is just $0.01 per share, or $0.04 on an annual basis. Based on its current stock price, that works out to a yield of just 0.03%.
On the heels of the 10-for-1 stock split that it completed in June, Nvidia now has an outstanding share count of roughly 24.6 billion. Based on that share count, the company will wind up paying out roughly $984 million to shareholders through dividends this year.
While no one is buying Nvidia stock for its dividend today, it’s possible that the company could dramatically increase its payout over time. Right now, it makes much more sense for the company to devote its capital to developing new hardware and software to strengthen its position in artificial intelligence, data centers, and other business categories. The semiconductor leader’s investments in these categories have spurred sales and earnings growth that have been far more rewarding for investors than dividend payments would have been.
On the other hand, returning more cash directly to shareholders may become more sensible when Nvidia’s business becomes more mature and its growth rates slow. Tech giants including Apple and Microsoft have followed that path, and it wouldn’t be surprising to see Nvidia make dividend payments a bigger part of stock ownership over the next decade.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 26, 2024
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
How Much Will Nvidia Pay Out in Dividends This Year was originally published by The Motley Fool
Source Agencies
