Artificial intelligence (AI) is a key focus of many technology companies right now. It seems nearly every major technology player is already investing in its own AI, snatching up companies that are working on it, or a little bit of both.
But what if you're an investor who wants to venture into the burgeoning AI market -- which may reach $37 billion by 2025 -- and earn a dividend on your investment at the same time? For that, you should look to the top five dividend stocks in artificial intelligence. These companies aren't necessarily the best dividend stocks you can choose, but they're some of the best AI players that also pay their investors:
|Company||Market Cap||2016 Revenue||Dividend Yield||Payout Ratio|
|IBM (NYSE:IBM)||$143 billion||$79.9 bilion||3.7%||46%|
|Microsoft (NASDAQ:MSFT)||$528 billion||$85.3 billion||2.3%||66%|
|Intel (NASDAQ:INTC)||$168 billion||$59.4 billion||2.9%||45%|
|NVIDIA (NASDAQ:NVDA)||$82 billion||$6.9 billion||0.37%||18.9%|
|Apple (NASDAQ:AAPL)||$802 billion||$215 billion||1.49%||26.6%|
IBM is a longtime player in the AI space (essentially, since the beginning) but launched its "cognitive solutions" business in 2011, and just added its Watson AI services for its mainframe customers.
The company's latest move aims to make Watson the go-to AI for sifting through private data on company clouds, so that enterprise businesses can better use all of the data they've collected.
IBM is understandably keen on getting its AI systems into more businesses, because the company earns 82% gross profit margin from its cognitive solutions segment, far higher than any of its other businesses.
IBM is a solid dividend play in addition to its lofty AI pursuits. The company has raised its dividend every year for the past 22 years, and has a yield of about 3.7% and payout ratio of 46%.
Microsoft already uses artificial intelligence in everything from its Bing search engine to its Xbox gaming console. But it's the company's Azure cloud-computing platform that AI-leaning investors should focus on most.
Azure's machine-learning capabilities are already used for Microsoft's retail, financial services, healthcare, and manufacturing customers.The company doesn't share how much revenue it earns from any of its AI services, but Microsoft is on track to earn $20 billion from its cloud-computing platform by fiscal 2018.
The company wants its Microsoft Graph -- a collection of user data from Microsoft apps on varying devices -- to build what it calls the "intelligent cloud," so that consumer and enterprise devices are aware of the information that they need, when they need it.
Microsoft has increased its dividend, currently at a 2.3% yield, for the past 13 years, and has a payout ratio of 66%.
Intel has consistently moved further into AI over the past few years, with the development of its own AI chip and purchases of companies focused on AI technologies. Its biggest purchase came in late 2015, when it bought Altera for $16.7 billion, to acquire the company's field programmable gate array (FPGA) chip technology, ideal for creating AI chips for cloud computing. And most recently the $15.3 billion purchase of Mobileye, maker of driverless-car technology, moved the company further into the AI space.
Mobileye uses AI to teach cars how to respond to new driving scenarios based on their past experience. It says that its technology is "one of the first embedded versions of AI" -- actually built into chips in the car, as opposed to in the cloud.
Intel currently has a dividend yield of 2.9% and its payout ratio is about 45%. The company is still in the middle of transitioning away from its old PC business, but its bet on AI technology could prove to be a winner as this market continues to expand.
NVIDIA is at the forefront of artificial intelligence both in the driverless-car space and in data centers. The company's Drive PX 2 supercomputer uses AI to help autonomous cars understand their surroundings, and make driving decisions based on that information.
NVIDIA's DGX-1 supercomputer uses the company's Pascal architecture chips, built for AI, to process information much like humans do (via neural networks); it can do the work of 250 traditional servers.
Investors should know while NVIDIA has lots of AI upside, it only began paying a dividend in 2012, and its trailing 12-month yield is only 0.37% right now. The company's payout ratio is currently about 18.9%. And it's worth noting that NVIDIA proved in its latest quarter that it still has lots of room to grow, which leaves open the opportunity for more dividend growth as well.
Apple has been involved in AI for a while; its most public foray into the space came when it launched Siri back in 2011. The company has since quietly infused AI upgrades into Siri and its native apps. For example, its Maps app uses AI to redirect drivers around traffic and AI is used to identify people in the Photos app.
The company has AI research centers in Seattle, purchased an AI company called Turi for $200 million last year, and recently announced a new AI research lab in Japan. Some people have been skeptical about Apple's opportunity in AI, because the company is famous for keeping its user data private, and AI needs to analyze lots of data to be effective. But Apple can still improve how its customers interact with their Apple devices via embedded AI systems.
The company has paid out a quarterly dividend on a continual basis, and has increased its dividend each year since it started the dividend plan in 2012. Apple has kept to its word of increasing its dividend on a yearly basis, and most recently announced a 10.5% increase in its fiscal second quarter.
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