You don't buy growth stocks primarily to receive income. Many of these stocks don't pay dividends at all. However, that doesn't mean you can't earn dividend income from growth stocks.
The biggest growth stocks on the planet right now are the so-called "Magnificent Seven" stocks. Can you count on sitting back and having dividends pour in with these stocks? Yes -- at least with some of them. Here's how much dividend income you'd make by investing $70,000 in the Magnificent Seven stocks.
A dividend divide
There's a clear "dividend divide" among the Magnificent Seven stocks. Although they all arguably make enough money to pay dividends, only four actually do so.
Microsoft (MSFT -1.00%) initiated its dividend program in 2003. Since then, the tech giant has increased its dividend every year.
Apple (AAPL 2.48%) technically began paying quarterly dividends decades ago. However, the company ended its dividend program in 1995 and didn't resume distributing dividends until 2012. Like Microsoft, Apple has consistently increased its dividend payout.
Nvidia (NVDA 0.03%) is perhaps the most surprising dividend stock in the Magnificent Seven. The big chipmaker first declared a quarterly dividend in 2012. Nvidia increased its dividend regularly for several years but has maintained a steady payout since late 2019.
Meta Platforms (META -2.41%) is the newest Magnificent Seven dividend payer. The social media company initiated its dividend program earlier in 2024.
Amazon, Alphabet, and Tesla don't currently offer dividends. That could change in the future for two of the three, though. Goldman Sachs analysts predict that Amazon and Alphabet could begin paying dividends, perhaps as soon as this year.
Counting the money
So how much dividend income could you make by investing $70,000 in the Magnificent Seven stocks? If you bought $10,000 of each stock, the total would be just under $170. The following table breaks down how much in dividends each stock would contribute:
| Stock | Dividend Yield | Annual Dividend Income |
|---|---|---|
| Microsoft | 0.71% | $71.00 |
| Apple | 0.56% | $56.00 |
| Meta Platforms | 0.41% | $41.00 |
| Nvidia | 0.018% | $1.80 |
| Amazon | N/A | $0.00 |
| Alphabet | N/A | $0.00 |
| Tesla | N/A | $0.00 |
| Total | $169.80 | |
Data source: Google Finance. Calculations by author. N/A = Not Applicable.
Of course, if you were truly seeking dividend income you probably wouldn't buy shares of Amazon, Alphabet, and Tesla. Let's crunch the numbers assuming you invested $70,000 split equally across the four dividend payers in the Magnificent Seven ($17,500 in each stock). The following table shows how much you'd make:
| Stock | Dividend Yield | Annual Dividend Income |
|---|---|---|
| Microsoft | 0.71% | $124.25 |
| Apple | 0.56% | $98.00 |
| Meta Platforms | 0.41% | $71.75 |
| Nvidia | 0.018% | $3.15 |
| Total | $297.15 | |
Data source: Google Finance. Calculations by author. N/A = Not Applicable.
Would most income investors be happy with an annual dividend income of less than $300 from an initial investment of $70,000? Probably not.
Limited magnificence
The magnificence of the Magnificent Seven stocks is limited. None of them offer attractive dividends. The best dividend payer in the group, Microsoft, still has a dividend yield of barely over half of the yield of the S&P 500.
Dividends are an afterthought if you're investing in the Magnificent Seven. Buy these stocks for their growth prospects. Many other stocks are more magnificent if you want solid dividend income.
