NVIDIA Shareholders Just Locked in Dividends– Here Is What You Need to Know

Today is the ex-dividend date for NVIDIA (NASDAQ: NVDA) shareholders interested in the company’s quarterly dividend. Any investors who held shares as of the market close yesterday will qualify for NVIDIA’s next quarterly cash dividend of $0.01 per share, set to be paid on April 2, 2025. While NVIDIA is a dominant force in AI and data center markets, and the 3rd largest publicly traded company behind Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT), its dividend payout is minuscule, raising the question: should investors even care about it? Why Investors Like Dividend Stocks But first lets look into why investors like dividend paying stocks in the first place. Sure, dividends play a crucial role in long-term wealth accumulation. Studies consistently show that dividend-paying stocks outperform non-dividend-paying stocks over extended periods. For instance, according to a Ned Davis Research study, dividend growers and initiators returned an annualized 9.6% from 1972 to 2022, compared to just 4.8% for non-dividend-paying stocks Beyond returns, committing to regular dividend payments can instill financial discipline within a company’s management. However in NVIDIA’s case, the minimal payout suggests that management prioritizes reinvesting earnings into areas like research and development, acquisitions, and other growth initiatives over returning capital to shareholders. Such a strategy aligns with NVIDIA’s focus on maintaining its leadership position in rapidly evolving markets like AI and data centers. Clearly, investors aren’t buying NVIDIA for its dividend income. Should Investors Care About NVIDIA’s Dividend? With such a low payout, does NVIDIA’s dividend matter? The short answer, not really. But in the long term, there’s potential. NVIDIA’s financials suggest plenty of room for dividend growth if management chooses to prioritize shareholder returns. NVIDA posted $39.3 billion in Q4 revenue, up 12% sequentially and 78% year-over-year, with full-year revenue hitting $130.5 billion. In the last quarter along, NVIDIA returned $8.1 billion to shareholders through dividends and share repurchases. CEO Jensen Huang’s stance is to prioritize reinvesting profits into innovation and acquisitions rather than boosting its dividend. But as the company matures and its cash flow grows, there’s a reasonable case that NVIDIA could meaningfully increase its dividend over time—especially if earnings growth slows in the future. However, this scenario is likely years away from coming to fruition. NVIDIA’s ex-dividend date is here, but its payout remains symbolic rather than substantial. While dividend investors won’t be impressed, the company’s financial strength provides room for future increases if management shifts priorities. For now, NVIDIA remains a high-growth AI juggernaut that rewards shareholders primarily through capital appreciation and buybacks, rather than dividends Collect Your Dividend But Focus on Growth Looking ahead, NVIDIA projects its first-quarter revenue for fiscal year 2026 to reach $43 billion, plus or minus 2%, surpassing analysts’ expectations of $41.78 billion. This optimistic outlook is bolstered by the company’s successful launch of the Blackwell AI supercomputers, which achieved billions in sales during their first quarter, and the escalating demand for AI-driven applications. NVIDIA’s growth is not slowing down, despite the stocks recent pull back. Will we see growth like we have seen the past 5 years where the stock returned an annualized 82%? Probably not, but investors should focus on the outrageous growth and enjoy the dividend kicker. The post NVIDIA Shareholders Just Locked in Dividends– Here Is What You Need to Know appeared first on 24/7 Wall St..