So you're looking for dividend income -- good for you! Dividend income can be a lifesaver in retirement and can provide cash for more investing when you haven't yet retired.
You might also be wishing you were an Nvidia (NVDA +2.90%) shareholder -- because, let's face it, who wouldn't want to be? The semiconductor company has been on a tear in recent years, growing like gangbusters and averaging annual gains of 75% over the past five years and 51% over the past 15 years.
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If you're thinking maybe you can combine your quest for dividend income and for Nvidia shares, you might want to think again, though -- because while Nvidia does pay a dividend, it isn't a very big one. It's currently a penny per share per quarter, totaling $0.04 per share over the course of a year.
So if you're looking for, say, $500 in annual dividend income, you'd need a lot of Nvidia shares. Divide $500 by $0.04, and you'll get 12,500 -- which is the number of shares you'd need to own to generate $500 per year in dividends. Here's the catch -- with shares recently at $142 apiece, buying 12,500 shares would cost you nearly $1.8 million. That could certainly be a terrific investment, but it's not the most efficient way to produce annual income of $500.
NASDAQ: NVDA
Key Data Points
So look elsewhere for great dividend investments, but do consider investing in Nvidia. It used to be known as a maker of gaming-chip semiconductors, but it's now a titan in the world of data center chips (often used for artificial intelligence (AI) operations and even cryptocurrency mining). It may grow via acquisitions, too.
Better still, Nvidia's stock seems reasonably valued at recent levels. Its recent forward-looking price-to-earnings (P/E) ratio of 34, for example, is below its five-year average of 40. And its recent price-to-sales ratio of 24 is close to its five-year average, though that's quite a steep level.
