Nvidia declared a 2,400% dividend increase from 1 cent per share quarterly to 25 cents per share and announced an $80 billion share buyback program. The dividend will be paid on June 26 to shareholders on record as of Thursday. The chipmaker attributed the payout boost to a cash-flow windfall driven by demand for its artificial intelligence chips in data centers, as the tech sector became the largest dividend payer in the S&P 500 for the first time ever.
Nvidia Declares 2,400% Dividend Increase and $80 Billion Buyback
Nvidia announced it will increase its quarterly dividend from 1 cent per share to 25 cents per share, representing a 2,400% increase. The company also declared an $80 billion share buyback program. The dividend will be paid on June 26 to shareholders on record as of Thursday.
CEO Jensen Huang said the company will expand into chips for personal computers, which will "reinvent the PC." The company has seen demand for its artificial intelligence chips in data centers.
Tech Sector Becomes Largest S&P 500 Dividend Payer
The tech sector is now the largest dividend payer in the S&P 500 for the first time ever, according to UBS strategist Maxwell Grinacoff. After the dividend increase, dividend futures moved up at least two to three points across the curve, "reflecting the expected addition to the bottom-up consensus estimates for 2027 onwards," Grinacoff said in a note Monday.
Current dividend yields for major tech companies remain under 1%. Nvidia currently has a 0.46% dividend yield, while Apple yields 0.35% and Microsoft has a 0.85% dividend yield. The S&P 500 dividend yield stands at 1.01%.
Alphabet Raises Quarterly Dividend 5% to 22 Cents
Alphabet, which yields 0.25%, announced a dividend increase. The company is raising its quarterly dividend by 5% to 22 cents per share. It is payable on June 15 to shareholders of record as of June 8.
Expert Commentary on Future Tech Dividend Trends
UBS strategist Maxwell Grinacoff stated, "We think this could potentially open the door for other top-weighted SPX corporates with healthy FCF [free-cash-flow] yields to start paying or increasing dividends as part of their shareholder return programs." He expects the most dividend growth over the next five years to come from tech, primarily from Nvidia and Amazon.
Kevin Simpson, founder and CEO of Capital Wealth Planning, said, "They don't necessarily have to choose between growth or dividends, because they're going to have so much free cash flow coming in that I would expect that they will follow suit. Tech companies could outpace dividend growth across the board."
Seth Hickle, chief investment officer at Mindset Wealth Management, stated, "While Nvidia's dividend increase was not meaningful from an income perspective, I think the signal was important. It's more about the maturity of a company. It's really a sign that AI leaders are evolving into some cash-generating franchises."
Daniel Peris, author of "The Ownership Dividend" and head of the strategic value dividend group at Federated Hermes, said, "With each passing day or month or quarter of base rates that are normal, the expectation of a cash return that is in line with or better than that is a reasonable expectation." He believes the current 10-year Treasury yield, now at around 4.5%, is a normalized base rate.
Joe Tigay, portfolio manager of the dividend-focused Rational Equity Armor Fund, said, "On the short-term side, looking at the environment, I think Nvidia is going to be standing alone right now in this backdrop."
Simpson identified Amazon as a potential dividend initiator, though he stated he does not believe it is imminent. Hickle named Broadcom, Texas Instruments, Qualcomm, Cisco and Oracle as companies "on the cusp of becoming real dividend powerhouses." Other than Oracle, the stocks all have yields over 1%, with Texas Instruments sitting at the top with a 1.83% yield.
Tigay said, "I'd love to see AMD. AMD would be rewarded by the market if they did that, but more important for AMD is just having products that are selling catching up to Nvidia."
FAQ
What dividend increase did Nvidia announce?
Nvidia declared a 2,400% dividend increase from 1 cent per share quarterly to 25 cents per share. The company also announced an $80 billion share buyback program. The dividend will be paid on June 26 to shareholders on record as of Thursday.
What are the current dividend yields for major tech companies?
Nvidia currently has a 0.46% dividend yield, Apple yields 0.35%, Microsoft has a 0.85% dividend yield, and Alphabet yields 0.25%. The S&P 500 dividend yield stands at 1.01%. Texas Instruments has a 1.83% yield.
When will Alphabet pay its increased dividend?
Alphabet is raising its quarterly dividend by 5% to 22 cents per share. It is payable on June 15 to shareholders of record as of June 8.
