5 Solid Artificial Intelligence (AI) Stocks That Also Pay Dividends
Written by Keithen Drury for The Motley Fool -> The stocks don't have that impressive a yield right now. Most companies pay out very little of their earnings in dividends. Dividend investing is an area some investors like to focus on because it provides a nearly guaranteed inc
Most companies pay out very little of their earnings in dividends.
Dividend investing is an area some investors like to focus on because it provides a nearly guaranteed income stream. However, the highest-yielding dividend companies also tend to grow more slowly, so generating a greater total return than the stock market involves a combination of dividend yield and stock price appreciation.
However, I think most investors are better suited to finding stocks that are growing rapidly and paying dividends. These companies can grow their dividends over the next decade, turning a small payment today into a huge payout a decade or more from now.
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There is no greater growth sector than artificial intelligence (AI) right now. Fortunately, several companies in this realm pay dividends. Although they may not be the highest yields, that could change over the next few years as cash flows explode from new AI business units.
The five dividend stocks I want to focus on today are Nvidia (NASDAQ: NVDA) , Taiwan Semiconductor Manufacturing (NYSE: TSM) , Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) , Microsoft (NASDAQ: MSFT) , and Meta Platforms (NASDAQ: META) . These five companies are the ones you'll see on the list of the best AI stocks to buy, but dividends are rarely a part of the investment thesis. That's because dividends aren't the focus right now -- raw growth is. Companies like Alphabet, Microsoft, and Meta Platforms are plowing every bit of unspent money they can into data centers.
Meanwhile, Nvidia and Taiwan Semiconductor are supplying these companies with components necessary to fill these data centers with computing devices. As a result, they are able to focus a bit more on their dividend. From a payout perspective, none of these stocks has a yield greater than 1%.
While Nvidia looks like it barely pays a dividend, that's changing. During its last earnings report, Nvidia announced a dividend increase from $0.01 per share to $0.25 per share. That works out to about a 0.45% yield, which isn't breathtaking, but it is an improvement .
