Investing in dividend-paying stocks is one of the easiest ways to bring in passive income. The tricky part? Deciding which stocks you want to invest in and how long it will take before some money hits your account.
One strategy is to research companies you are already familiar with Nvidia (NASDAQ: NVDA). The iconic chipmaker has a market capitalization of more than $3 trillion and is one of the ‘Magnificent Seven’ stocks. In addition, Nvidia rewards loyal investors with a dividend.
All things considered, the dividend yield is unlikely to delight income investors; it is a paltry 0.02%. However, paying out dividends says something about the confidence of the company. It’s a small sign that they believe in their financial stability, meaning those cash flows can keep coming in.
Brace yourself: Nvidia’s quarterly dividend payout is just $0.01 per share, which works out to just $0.04 per year. And unless the company increases the payout, we could be looking at the same amount in 2025. Not exactly a jackpot for income investors, but here’s some perspective:
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Stock splits: Nvidia implemented a 10-for-1 stock split in June, meaning each share was split into 10. Adjusted for this, that $0.01 per share is the same as $0.10 per share before the split. The payout therefore appears smaller per share, but is proportional to the total value held.
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Dividend increases: Companies can increase their dividends at any time, which could increase your payout. For example, in May, Nvidia increased its quarterly cash dividend by 150%, from $0.04 to $0.10 per share.
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Growth potential: Instead of paying out more dividends, Nvidia is funneling money into research, development and expansion in artificial intelligence and computing. If you can tolerate the stock’s ups and downs, you can benefit from its long-term growth.
So while Nvidia’s dividend isn’t impressive, its growth story has investors drooling. If you’re looking for a company that focuses on future profits rather than huge payouts today, Nvidia should definitely be on your watchlist.
Consider the following before buying shares in Nvidia:
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