The self-driving car industry is still in its infancy as tech specialists and automakers test their technologies in simulators and real-world conditions. But over the next five years, driverless cars could start gaining critical mass considering the timelines issued by the various stakeholders.

The likes of Ford, Honda, Toyota, and Volvo, among others, believe that vehicles will have some level of autonomy by 2021. Eventually, by 2040, 90% of all vehicles sold are expected to be highly or fully autonomous with Level 4 or Level 5 self-driving capabilities, according to venture capital firm Loup Ventures.

This means that investors looking to take advantage of the rise in autonomous cars will have to remain patient. But what if their patience is rewarded with dividends?

Tech specialists NVIDIA (NASDAQ:NVDA) and Intel (NASDAQ:INTC) are among the frontrunners in self-driving car technology. Both companies are touted to benefit from this market, and both pay a dividend that should get better in the long run as self-driving cars gain traction.

Person reading a book inside a self-driving car.

Image Source: Getty Images.

The case for NVIDIA

NVIDIA has paid a dividend for the past five years, but it hasn't been a fat one. The company's current dividend yield stands at just 0.29%, compared to 1.94% at the end of 2013. But this massive decline in the yield is a result of the rapid acceleration in the share price. In fact, NVIDIA nearly doubled its dividend in 2017, paying out $0.57 per share, compared to the 2013 dividend payout of $0.31 per share.

But the stock has risen more than 1,200% over the same time, so its yield has declined.

NVDA Chart

NVDA data by YCharts

In 2017, the company's payout increased 16% as compared to 2016 levels. It won't be surprising if it keeps hiking the dividend going forward given a very conservative payout ratio of just 14.3%, as well as a rapidly growing bottom line.

Last quarter, NVIDIA's non-GAAP net income increased 46% year over year thanks to a massive jump in revenue from the gaming and data center businesses. The automotive business didn't play a big role in this terrific growth, as it contributes just over 5% of the total revenue, but it should gain strength as driverless cars bearing NVIDIA's technology hit the roads in the coming years.

According to NVIDIA CEO Jensen Huang, fully autonomous cars could be on the road by 2021. The chipmaker doesn't want to miss this opportunity, so it is trying to stay ahead of the field by bolstering its product development.

A few months back, NVIDIA announced that it is testing a new artificial intelligence enabled self-driving car platform called the DRIVE PX Pegasus. The company claimed that this new chip is 10 times more powerful than its existing DRIVE PX2 chip, and is capable of achieving the highest Level 5 autonomy in self-driving cars.

The DRIVE PX Pegasus will allow NVIDIA to eliminate the need for steering and pedals as a car equipped with this chip will be fully self-sufficient for driving. NVIDIA has already built a solid ecosystem of 225 partners that are using its DRIVE PX platform to develop driverless cars and related solutions.

Of these, 25 are already testing the new Pegasus chip, and most of these partners are engaged in providing ride-hailing services. NVIDIA believes that the new chip could be the key to powering driverless taxis.

Success in this market could substantially boost NVIDIA's revenue and earnings as the global ride-hailing market is expected to be worth $276 billion in 2025 thanks to the annual projected growth of 20%, according to Markets and Markets. So, it won't be surprising if NVIDIA enhances its dividend payout further over the next several years thanks to its strong position in this fast-growing space.

The case for Intel

Intel has been paying a dividend since 1992, sporting a fatter dividend yield of 2.44% when compared to NVIDIA. More importantly, Chipzilla has consistently raised its dividend payout since 2003. Last year, Intel increased its dividend payout by almost 6%, and it won't be surprising if it keeps raising the same in the long run given a safe payout ratio of 33.5%.

Intel's payout ratio suggests that its earnings are capable of supporting its existing dividend. So, an expansion of the company's bottom line and maintenance of the payout ratio will lead to higher dividend income for investors in the long run.

The company's success in autonomous cars will play a key role in defining its long-term earnings growth as it has made big bets on this space. Intel has turned itself into one of the leading contenders in driverless cars after its Mobileye acquisition last year. The Israel-based tech specialist was already a big name in the automotive industry, providing software for enabling advanced driver assistance systems to 25 automaker partners.

After this acquisition, Intel has been able to build an impressive roster of automakers and component suppliers to fast-track its self-driving car development. In fact, Intel's automotive alliance of BMW, Fiat Chrysler, and Aptiv (formerly Delphi) want to put production-ready fully autonomous vehicles on the road by 2021.

Meanwhile, Aptiv and Mobileye are developing an off-the-shelf driverless car system that could be sold to automotive original equipment manufacturers (OEMs) beginning as soon as next year. 

Intel has already landed a substantial win here in the form of Waymo, Alphabet's self-driving car subsidiary. It is one of the biggest names in this space as its cars have been tested for more than 4 million miles on public roads. More importantly, Waymo's cars have recorded the lowest rate of disengagement (when a human driver had to take control) when compared to the rest of the field despite clocking such tremendous mileage.

Intel has been supplying various parts to Waymo since 2009 for enabling self-driving technology. So, it is highly likely that Waymo will stick with Intel for the long run, which should give the latter access to the burgeoning ride-hailing market.

Waymo recently launched a fully autonomous ride-sharing service in Arizona using Fiat Chrysler's Pacifica minivans, making it clear that Waymo plans to eventually disrupt the ride-hailing industry by offering driverless taxis. 

Both Intel and NVIDIA look primed to take advantage of the big driverless car opportunity. Investors, however, shouldn't expect quick gains as we are still a few years out before the mainstream adoption of driverless cars. But the good thing is that NVIDIA and Intel will reward investors' patience with a dividend, which could eventually increase as self-driving cars come closer to reality.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Ford, and Nvidia. The Motley Fool recommends BMW and Intel. The Motley Fool has a disclosure policy.