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%.
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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
