Nvidia Corporation (NASDAQ: NVDA) is a technology giant known for its breakthroughs in graphics processing units (GPUs) and artificial intelligence (AI). Although Nvidia has traditionally emphasized reinvesting profits in growth, the company has also distributed dividends to shareholders. The following is a comprehensive breakdown of Nvidia’s past dividend payments and projections for its future dividends.
Historical dividend payments
Nvidia started its dividend policy in 2012, and the yield was excellent then with a figure of more than 2%. But when the stock price of the company rose exponentially because of its exponential growth, the dividend yield declined considerably. Below is a summary of Nvidia’s dividend history:
- Nvidia started quarterly dividends in 2012 at $0.075 per share.
Gradual increases were implemented year after year, but these adjustments lagged behind the exponential increase of the stock price.
Current dividend trends
As of 2023, the quarterly dividend of Nvidia stood at $0.04 per share, reflecting that its priority is reinvesting profits rather than shareholder dividends.
In 2024, Nvidia announced a 150% dividend increase to $0.10 for every common share. While the increase was high, the resulting dividend yield was very low due to the elevated stock price.
- Subsequent to a 10-for-1 June 2024 stock split, the dividend decreased to $0.01 per share post-split.
Current dividend yield
Even after the dividend increase, Nvidia’s dividend yield is still low:
- Yield before increase: Before the 2024 increase, Nvidia’s dividend yield was a meager 0.02%.
- Yield after increase: The 150% increase brought the yield to around 0.03%, which is insignificant compared to sector peers such as Intel or KLA Corporation.
This low yield is indicative of Nvidia’s growth and stock buyback as its capital return strategy in lieu of big cash dividends.
Why are Nvidia’s dividends so low?
Nvidia’s low dividend yield is due to its phenomenal stock price rise. The formula for forward yield—dividend payments next year divided by the current stock price—has been significantly impacted by the denominator (stock price) rising at a much faster rate than the numerator (dividend payments).
Future dividend expectations
Dividend growth:
- Large dividend hikes in Nvidia dividends are not anticipated by analysts until prior to 2030 owing to the focus on reinvestment and share repurchases imposed on it by the management.
- The annual payout is currently $0.04 per share following the split.
Capital allocation strategy:
- Most of Nvidia’s shareholder rewards come in the form of buybacks of stock instead of dividends.
- The strategy is aligned with the company’s focus on AI and data center technology growth opportunities.
Dividend sustainability:
- Nvidia’s financial health and profitability confirm that it has the capability to maintain or marginally grow dividends without affecting the growth projects.
Key dates for recent dividends
For anyone interested in the dividends of Nvidia, the below are some key dates from recent releases:
- Record date: June 11, 2024
- Ex-dividend date: June 11, 2024
- Payment date: June 28, 2024.
These are the cut-off dates for investors to hold shares in order to receive the last payment.
Nvidia traditionally paid small dividends relative to its high price and growth. Its current annual dividend of $0.04 per share (following the split) represents a small yield of approximately 0.03%. Large future dividend increases are not likely because management prefers reinvestment and stock repurchase to direct payments to shareholders.
For income stocks, Nvidia is not a good choice as it has low yields but this is just a suggestion. However, for investors looking for capital appreciation and exposure to revolutionary technologies such as AI and data centers, Nvidia remains a good long-term investment choice.
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