Although companies leading the way in artificial intelligence innovation may not be traditionally associated with high profitability, there are opportunities to discover lucrative dividend payouts by delving into the sector’s key players.
Moreover, many of these firms possess the capacity to swiftly enhance their dividend distributions at will. If you make an investment now, there’s a high likelihood that your dividend income will escalate as the AI industry continues to flourish. Let’s delve into five top AI companies that also provide dividends.
1. Apple
- Latest Dividend: $.96 per share
- Yield: 6%
- Payout Ratio: 15%
In a recent analysis, I discussed Apple’s (Nasdaq: AAPL) potential for significant dividend growth. The company recently upped its dividend to \(.96 per share, marking a 4% increase from the previous period. Despite Apple’s focus on stock buybacks and its colossal \)2.6 trillion valuation, shareholders could benefit from its shift towards allocating more capital to higher dividend payouts.
A substantial upside for any investor in the “Beautiful 7” category would be if Apple doubled its dividend. Even at that level, the payout ratio would stand at a respectable 30%. By integrating its anticipated AI software offerings in the latter part of the year with an announcement of increased dividend payouts, Apple could witness promising outcomes.
2. Broadcom
- Current Dividend: $21 per share
- Yield: 1.6%
- Payout Ratio: 70%
Broadcom (Nasdaq: AVGO) is positioned to potentially double its dividend imminently, with 70% of its earnings already being distributed. Despite the seemingly modest payout ratio, Broadcom’s capability to boost dividends surpasses what the numbers might suggest. With approximately \(18.4 billion in free cash flow generated last year against \)8.1 billion in dividend payments, the company’s room for dividend growth is evident.
Currently disbursing \(5.25 per share in dividends, **Broadcom** could provide an additional \)11 in annual income, significantly exceeding its 2018 dividend yield of $11.20. In essence, companies poised for AI-driven growth are committing to rewarding shareholders through dividend distributions. For income-oriented investors seeking exposure to AI outcomes, Broadcom warrants serious consideration.
3. NVIDIA
- Current Dividend: $.16 per share
- Yield: 1%
- Payout Ratio: 1.3%
NVIDIA (Nasdaq: NVDA) currently offers a modest $.16 annual dividend, unchanged since 2020. The company’s strategic focus on share buybacks and investments in AI-related ventures and partnerships has limited its dividend growth potential in recent years.
However, there exists a possibility that NVIDIA may opt to return excess cash to shareholders through increased dividend payouts or special dividends, given its robust stock performance and soaring earnings. While the current dividend alone may not justify holding the stock, continued dividend payouts could enhance shareholder returns in the future.
4. Microsoft
- Latest Dividend: $3 per share
- Yield: 7%
- Payout Ratio: 25%
In a demonstration of commitment to dividend growth, Microsoft (NASDAQ: MSFT) has significantly raised its dividend from \(1.84 in 2019 to \)3.03 presently. This upward trajectory in earnings per share bolsters the appeal of the company’s dividend yield, especially amidst substantial stock price appreciation.
The company’s steadfast dedication to delivering returns suggests a sustained dividend growth path. If Microsoft were to distribute a conservative 33% of its estimated \(150 billion cash reserve by 2028, it could potentially issue a remarkable \)50 billion in dividends annually.
5. Taiwan Semiconductor
- Current Dividend: $.44 per share
- Yield: 1.8%
- Payout Ratio: 33%
Taiwan Semiconductor (NYSE: TSM) has witnessed a surge in its stock value recently, reflecting investor enthusiasm. Whether considering the stock’s attractive P/E ratio of 24 or the company’s consistent success in supplying cutting-edge chips for AI applications, Taiwan Semiconductor stands out as a compelling investment option.
In the event that artificial intelligence emerges as the next major trend in technology, Taiwan Semiconductor is poised to be a significant beneficiary. Offering a respectable 1.8% yield for income-focused investors, Taiwan Semiconductor represents a compelling choice for those seeking exposure to AI growth prospects alongside dividend income.
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