Nvidia (NVDA +5.93%) started paying a dividend in mid-2013. Since then, it's raised its dividend rate several times. Meanwhile, its share price has exploded higher by more than 20,000%.
Can Nvidia deliver both big dividends and massive growth potential to your portfolio?
NASDAQ: NVDA
Key Data Points
Nobody would call this dividend "high yield"
Though Nvidia's dividend has grown over five times since 2013, its yield today is just 0.02%, with a per share annualized dividend of $0.04. When the dividend was first instituted, for comparison, the yield quickly reached 2%. The problem, of course, hasn't been cuts to the dividend, but rather a soaring stock price. Nvidia shares have simply increased in value far faster than the dividend has.
NVDA Dividend Yield data by YCharts.
At the current dividend yield, you'd need to invest around $5 million to generate $1,000 in annual dividend income. Suffice it to say, Nvidia isn't a great choice if you're looking to invest for traditional income generation. But income can be realized through more than just dividends. You can also create your own income stream by periodically selling some shares.
Over the last 12 months alone, Nvidia shares have increased in value by 167%. You would have beaten just about every dividend stock on the market if you simply held on to most of your shares, but sold whatever portion you needed to cash out an amount equal to what you'd have hoped to reap in payouts from a more dividend-centric investment.
Of course, past performance is no guarantee of future results, and given Nvidia's $2.9 trillion market cap, its biggest days of growth may be behind it. But let this stock be a lesson for all dividend investors. Even if you're on a fixed income, don't be afraid of buying growth stocks. Investors can achieve income generation through both dividends and capital appreciation. The goal should be to invest in promising businesses that can create shareholder value, regardless of how exactly that value is shared with investors.
