Nvidia (NASDAQ: NVDA) is the world's leading supplier of advanced processors for artificial intelligence (AI) and data center applications. Strong demand for its graphics processing units (GPUs) has driven its stock price skyrocketing in recent years, with a gain of around 156% year to date in 2024 trading.
With a market cap of around $3.12 trillion at the time of writing, it is also the second largest company in the world, behind only AppleAnd since Nvidia stock has delivered such impressive share price gains, it's easy to overlook the fact that the company also pays a dividend.
Yes, Nvidia is a dividend stock (but just barely)
The fact that Nvidia doesn’t get much attention as a dividend stock isn’t surprising. The company’s quarterly payout is just $0.01 per share, or $0.04 annualized. Based on the current share price, that works out to a yield of just 0.03%.
Following the 10-for-1 stock split it completed in June, Nvidia now has an outstanding share count of about 24.6 billion. Based on that share count, the company will return about $984 million to shareholders in dividends this year.
While no one is buying Nvidia stock for the dividend today, it’s possible that the company could dramatically increase its payout over time. Right now, it makes far more sense for the company to spend its capital developing new hardware and software to bolster its position in artificial intelligence, data centers, and other business categories. The semiconductor leader’s investments in these categories have fueled revenue and earnings growth that is far more rewarding for investors than dividend payments would have been.
On the other hand, it may become more prudent to return more money directly to shareholders as Nvidia's business matures and its growth rates slow. Tech giants like Apple and Microsoft have followed that path and it wouldn't be surprising to see Nvidia make dividend payments a bigger part of its share ownership over the next decade.
Should You Invest $1,000 in Nvidia Now?
Before you buy Nvidia stock, here are some things to consider:
The Motley Fool Stock Advisor team of analysts has just identified what they think is the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the years to come.
Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $792,725!*
Stock Advisor offers investors an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks each month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*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 Jan 2026 $395 calls on Microsoft and short Jan 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
