Key Takeaways
- Several stocks involved in AI pay dividends, a great perk for investors.
- Strong share gains resulting from steep demand have pushed yields down.
- Despite depressed yields, the AI demand backdrop keeps these stocks highly-attractive.
Dividends come with many great perks, with the payouts essentially reflecting a form of ‘payday’ in the market. Technology sector stocks are often overlooked by income-focused investors, as these companies commonly use spare cash to fuel further growth.
But perhaps to the surprise of some, several stocks involved closely in the AI trade – Broadcom (AVGO – Free Report) , Vertiv (VRT – Free Report) , and NVIDIA (NVDA – Free Report) – shell out dividend payments. For those interested in getting paid with some AI exposure, let’s take a closer look at each.
VRT Sales Melt Higher
Vertiv has continued to see stellar growth thanks to hot demand for its cooling solutions, with EPS climbing 77% on the back of a 26% move higher in sales throughout its latest period. It’s enjoyed a nice sales acceleration as a result, as shown below.
Image Source: Zacks Investment Research
Shares currently yield a modest 0.2% annually, lower than that of the S&P 500 and the Zacks Technology sector average. Notably, the EPS outlook for its current fiscal year continues to be bullish, with the $3.59 per share expected up 23% over the last year.
Image Source: Zacks Investment Research
AVGO Keeps Generating Cash
Broadcom has long been recognized as a strong dividend technology player thanks to its rock-solid cash-generating abilities that have regularly allowed it to boost payouts. The company boasts a sizable 12.5% five-year annualized dividend growth rate, with shares currently yielding 1.2% annually.
Below is a chart illustrating dividends/share on a quarterly basis.
Image Source: Zacks Investment Research
The stock also boasts the highly-coveted Zacks Rank #1 (Strong Buy) thanks to a bullish EPS outlook, with analysts moving their expectations higher across the board. Current fiscal year growth rates are hard to ignore, with AVGO expected to see 34% EPS growth on 20% higher sales.
Image Source: Zacks Investment Research
NVIDIA Pays Dividends?
NVIDIA continues to be an investor favorite thanks to its cutting-edge Data Center offerings that have resulted in unprecedented growth, with Data Center sales of $35.6 billion throughout its latest period up 90% year-over-year and 16% sequentially.
The rich demand backdrop has kept the stock at a favorable Zacks Rank #2 (Buy), with analysts continuing to remain bullish. And given the positive reaction to the company’s GTC AI conference just last week, it’s clear that the company remains a prime selection for the AI frenzy.
Image Source: Zacks Investment Research
NVDA shares currently yield a tiny 0.1% annually. But while the yield remains fractional relative to other dividend-paying stocks, the raw share performance has muted this concern entirely. The company raised the payout by 150% last year in May, though no increases have come since.
Image Source: Zacks Investment Research
Bottom Line
Dividends come with great perks for investors, providing a passive income stream and the ability to maximize returns through dividend reinvestment.
Although all three dividend-paying tech stocks above – Broadcom (AVGO – Free Report) , Vertiv (VRT – Free Report) , and NVIDIA (NVDA – Free Report) – aren’t high-yield, the bullish outlook for these companies’ AI offerings can’t be overlooked by income-focused investors seeking the join the frenzy.
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