Companies at the cutting edge of artificial intelligence aren’t known for being big dividend payers, but if you look throughout leaders in the field you can find some cutting dividend checks.
Better yet, many of these companies have the ability to easily double their dividend tomorrow if they wanted to. So, if you’re buying today there’s a strong chance your dividend checks could rise in the years to come if the AI field continues exploding. Let’s feature five top AI stocks that also pay out dividends.
1. Apple
- Current Dividend: $.96 per share
- Yield: .6%
- Payout Ratio: 15%
On Thursday I wrote about how Apple (Nasdaq: AAPL) could easily issue a significant dividend raise. The company recently raised its annual dividend to $.96 per share, which is just 4% higher than the prior year. While Apple has focused on buying back shares in recent years, with the company valued at $2.6 trillion, shareholders might see more benefits from Apple shifting toward paying more cash directly back to shareholders in the form of larger dividends.
If Apple doubled its dividend it would pay the highest yield of any “Magnificent 7” stock. Best of all, its payout ratio would still just be 30%, a very reasonable rate. If Apple paired announcing a larger dividend payment with its anticipated generative AI software offerings in the second half of the year, it could see strong returns.
2. Broadcom
- Current Dividend: $21 per share
- Yield: 1.6%
- Payout Ratio: 70%
Broadcom (Nasdaq: AVGO) might be stretching the definition of a stock that could double its dividend tomorrow. After all, its payout ratio stands at 70%. However, the company produced about $18.4 billion in free cash flow the prior year while paying out $8.1 billion in dividends, so Broadcom’s ability to increase payouts is stronger than its payout ratio might look.
Broadcom is currently paying out dividends of $5.25 per share, which implies $21 in annual dividends. That’s up strongly from 2018 when the company paid $11.20 in annual dividends. Simply put, few companies with the opportunities Broadcom has in AI have shown their dedication to returning capital to shareholders in the form of dividends. If you’re an income-minded investor who also wants the returns upside of AI, you absolutely have to look at Broadcom.
3. NVIDIA
- Current Dividend: $.16 per share
- Yield: <.1%
- Payout Ratio: 1.3%
Calling NVIDIA (Nasdaq: NVDA) a dividend stock is kind of laughable at this point, they’re just $.16 of dividends per year, which has been unchanged since 2020. Clearly, in recent years the company has been better off using its cash hoard to repurchase common stock and invest in promising startups and potential partners across the AI space.
And yet, with shares now trading near $1,000 and profits skyrocketing, there’s absolutely a chance NVIDIA could simply choose to return cash to shareholders in the coming years in the form of a one-time dividend or increased yield. NVIDIA’s dividend isn’t a reason to own the stock, but it’s also likely if they continue succeeding shareholders will see more income in the years to come.
4. Microsoft
- Current Dividend: $3 per share
- Yield: .7%
- Payout Ratio: 25%
Microsoft (NASDAQ: MSFT) has shown a strong commitment to increasing its dividend in recent years. Its dividends per share have risen from $1.84 in 2019 to $3 per share today. The company’s yield would look far more impressive if its stock wasn’t showing remarkable gains!
It’s like this commitment to paying dividends will continue into the future. With estimates of Microsoft’s dividend hitting $150 billion by 2028, if the company paid just a 33% payout on that total, it could issue an astonishing $50 billion in dividends annually!
5. Taiwan Semiconductor
- Current Dividend: $.44 per share
- Yield: 1.8%
- Payout Ratio: 33%
Taiwan Semiconductor‘s (NYSE: TSM) stock has been on fire in recent weeks. It’s hard not to love everything the Taiwan Semi offers, whether the stock’s reasonable P/E of 24 or the company’s absolute dominance in producing leading-edge chips utilized in artificial intelligence.
It’s clear that if artificial intelligence becomes the next mega-tend in technology, Taiwan Semiconductor will be one of the companies that benefit most from the trend.
Best of all, if you’re an income investor Taiwan Semiconductor pays a very respectable 1.8% yield. If you’re looking for a combination of a stock benefitting from AI and one that pays the best yield, it’s hard to top Taiwan Semi.
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