Over the past two years, semiconductor stocks and artificial intelligence plays have seen significant returns. One of the frontrunners in this race is Nvidia (NASDAQ: NVDA), currently the world’s premier chipmaker.
With a cutting-edge advantage in terms of technology and a vibrant ecosystem oriented toward enterprise solutions, the Jensen Huang-led tech powerhouse has positioned itself as a key part of the ongoing automation revolution.
Nvidia stock has seen prices increase by 177.53% on a year-to-date (YTD) basis. However, it has become increasingly hard for the business to impress shareholders — despite strong results in the last quarter, the price of an NVDA share has dropped by 4.88% on the weekly chart — bringing monthly losses up to 4.62%.
While the profit-taking has been fairly aggressive, retail investors and Wall Street researchers alike are bullish on NVDA stock. Technical analysis is pointing toward an end of the year rally. Conversely, a head and shoulders chart pattern is in play — and if the stock closes below $132, further losses could be in store. At press time, Nvidia stock was trading at $133.68.
One key area that is usually given little attention is the company’s dividend policy. Understandably, as this is a growth stock, and R&D expenditures are high, Nvidia isn’t exactly the most attractive asset for income investors. Let’s take a closer look at exactly how much investors will receive in 2024’s last dividend payout.
Nvidia’s dividend payments are paltry — but this is a good thing
Nvidia’s latest payment was declared on November 20, with a record date and ex-dividend date of December 5. In other words, investors who owned Nvidia shares before December 5 will receive $0.01 per unit of ownership on December 27.
Throughout most of the company’s history, $0.04 was paid out to investors on a quarterly basis. However, dividend payments have actually been slashed in 2024. In the first quarter of the year, investors received $0.04 — since then, quarterly payments have been cut down to $0.01.
All in all, an investor holding the stock through the entirety of the year would have received $0.07 — at a share price of $133.68, this brings Nvidia’s dividend yield to roughly 0.05%.
It’s quite clear that investing in Nvidia isn’t worth it on the merits of the company’s dividend — but this state of affairs is to be expected. Funneling profits into research and development, innovative new product lines, or expanding market share is a sensible way to increase shareholder value, particularly in the long run.
In contrast, paying out high dividends would be counterproductive — sure, it would be quite appealing temporarily, but it would risk limiting future upside potential.
Investors who are looking for a steady stream of income should, however, consider the YieldMax NVDA Option Income Strategy ETF (NYSEARCA: NVDY), which pays out roughly half the amount invested in it on an annual basis.
Ultimately, Nvidia’s dividends are more or less symbolic — capital appreciation is obviously the way that the company is providing benefits to investors, and the situation is unlikely to change any time soon, if ever.
Featured image via Shutterstock
Source: https://finbold.com/nvidia-to-pay-dividends-this-month-heres-how-much-investors-will-receive/