In 2012, Nvidia (NASDAQ: NVDA) announced its first dividend. At the time, the payout was approximately $0.001875 per share on a split-adjusted basis, which equates to a dividend yield of approximately 2%.
Since then, the dividend payout per share has increased dramatically. But the total amount the company is paying out in dividends today might surprise you.
This is how much Nvidia pays out in dividends
After a recent increase, Nvidia’s dividend payout has risen to $0.01 per share per quarter – five times the original payment. But due to a rapid rise in the share price – shares have risen in value by more than 27,000% over the past decade – the dividend yield has actually fallen. fallen to just 0.03%. Nvidia’s management team simply believes that the best use of its money today is to grow the company, not distribute it to shareholders.
Assuming the new higher rate holds, the company should pay out $0.04 per share over the next twelve months. That amounts to roughly $1 billion in dividends – a quarterly rate of about $246 million.
But given the much higher profits, where does Nvidia invest its resources if not in dividends? Approximately $1.9 billion went to capital expenditures over the past twelve months. But research and development has accounted for the lion’s share of spending, with more than $10 billion deployed last year.
The rise of artificial intelligence is just beginning, and Nvidia’s graphics processing units (GPUs) are a crucial part of the industry’s growth. Not only will Nvidia have to invest in new manufacturing facilities to meet growing demand, but its research and development budget will likely have to expand even further to fend off increasing competition. Suffice to say, don’t expect Nvidia to become a dividend giant anytime soon. Nearly all of the excess cash will be used to defend its leadership in the nascent but fast-growing AI industry.
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
How much will Nvidia pay out in dividends this year? was originally published by The Motley Fool
