CNBC semiconductor correspondent Kristina Partsinevelos argued mega-cap firms like Nvidia Corp (NASDAQ:NVDA) are great for investors seeking growth rather than income, as the AI chipmaker’s new dividend payout still reflects lower yields.
The chipmaker lifted its quarterly dividend to $0.25 from $0.01 after reporting blockbuster first-quarter earnings this week. The company will pay the new dividends starting with the June 26 payout.
Nvidia Still Yields Lower
In a post on X, Partsinevelos said Thursday, "Nvidia’s new $1.00 annual dividend now sits right next to Apple ($1.08) and above Alphabet ($0.88) in the mega cap payouts. Even after the jump from $0.04, NVDA’s yield is just 0.45%."
She emphasized, "Mega cap investors aren’t here for income, they’re here for growth."
Partsinevelos compared the dividend metrics to "h/t @HumOnTheMarkets," which shows that Nvidia's yield is aligned with the other mega-cap tech stocks.
Nvidia's 0.45% yield is significantly below that of Microsoft Corp‘s (NASDAQ:MSFT) 0.86% but higher than the yields of 0.36% for Apple Inc. (NASDAQ:AAPL), 0.35% for Meta Platforms Inc. (NASDAQ:META), and 0.23% for Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG).
Partsinevelos noted that the dividend yield on the S&P 500 is on the verge of an all-time low as artificial intelligence has inflated the value of tech stocks. Partsinevelos argued that many companies in the index, especially tied to AI stocks, pay lower dividends or have seen their stock prices rise faster than dividends.
According to a recent report, the broad market index is highly concentrated in the top 10 mega-cap U.S. stocks, representing a record 41% share of the total market cap. About half of the money is flowing toward companies tied to the AI boom.
Nvidia Could Be Cash-Rich
CNBC's "Mad Money" host Jim Cramer said that Nvidia will gradually become a cash-rich company like Apple and will be able to return more money to shareholders with a combination of dividends and buybacks. Cramer stated, "I know it sounds “boring” but it worked for Apple and Nvidia will have a lot of cash on hand…."
The market commentator pointed out that Nvidia will have a lot of cash on hand one day, given its remarkable position within the semiconductor landscape. Its debt-to-equity (D/E) ratio stands at a mere 0.07, while its return on equity (ROE) of 31.11%, significantly surpasses the industry average by 25.36%.
AI Boom Fuels Tech Surge
Artificial intelligence is rapidly becoming one of the most powerful drivers of the U.S. economy, as hyperscalers scale AI infrastructure spending. It is often viewed as a defensive trade amid worries about inflation, oil and slow growth.
Nvidia Beats
Nvidia reported earnings of $1.87 per share, while revenues climbed 85% year-over-year to $81.61 billion.
CEO Jensen Huang said, “The buildout of AI factories – the largest infrastructure expansion in human history – is accelerating at extraordinary speed.” “Agentic AI has arrived, doing productive work, generating real value and scaling rapidly across companies and industries.”
Benzinga Edge Stock Rankings indicate that the NVDA has a Momentum score in the 85th percentile with a strong price trend in the short, medium and long term. It also has a solid Growth score in the 98th percentile.
Image via Shutterstock/ jamesonwu1972
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