Exploring Dividend Opportunities in AI Stocks: AVGO, VRT, and NVDA
Dividends offer attractive benefits to investors, often seen as a ‘payday’ from the market. While many income-focused investors typically overlook technology stocks, frequently these companies reinvest profits for growth. However, it may surprise some to find that several stocks tied closely to the artificial intelligence (AI) sector—Broadcom (AVGO), Vertiv (VRT), and NVIDIA (NVDA)—offer dividend payments. Let’s examine each of these stocks and their potential for investors seeking AI exposure.
Vertiv’s Sales Surge
Vertiv has experienced impressive growth, driven by strong demand for its cooling solutions. The company reported a 77% increase in earnings per share (EPS), accompanied by a 26% boost in sales during its latest reporting period. This sales acceleration is illustrated below.
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Currently, Vertiv shares yield a modest 0.2% annually, which is lower than the average yield for the S&P 500 and the Zacks Technology sector. Analysts maintain a positive EPS forecast for the current fiscal year, projecting $3.59 per share, up 23% from last year.
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Broadcom’s Steady Cash Generation
Broadcom stands out as a solid player in the technology sector, recognized for its strong cash generation and consistent dividend increases. The company boasts a five-year annualized dividend growth rate of 12.5%, with a current yield of 1.2% annually.
Below is a chart displaying dividend payments per share on a quarterly basis.
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Broadcom holds a Zacks Rank #1 (Strong Buy), reflecting a bullish EPS outlook. Analysts have revised their expectations upward, projecting a 34% growth in EPS alongside a 20% increase in sales for the current fiscal year.
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NVIDIA’s Dividend Surprises
NVIDIA remains a top choice among investors due to its innovative Data Center solutions, which have driven remarkable growth. Recently, the company reported Data Center sales of $35.6 billion, representing a 90% year-over-year increase and a 16% sequential growth.
The strong demand environment has kept NVIDIA at a favorable Zacks Rank #2 (Buy), with analysts maintaining an optimistic outlook. Following the company’s recent GTC AI conference, investor enthusiasm suggests NVIDIA is actively participating in the AI trend.
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NVIDIA shares yield a minimal 0.1% annually. Although this yield is low compared to other dividend stocks, the compelling performance of the shares has offset concerns regarding yield. The company did raise its payout by 150% last May, though there haven’t been any increases since.
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Conclusion
Dividends provide investors with excellent advantages, including a steady income and the chance to enhance returns through reinvestment. While Broadcom (AVGO), Vertiv (VRT), and NVIDIA (NVDA) may not offer high yields, their positive prospects in the AI sector present new opportunities for income-focused investors wanting to take part in this growing niche.
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NVIDIA Corporation (NVDA): Free Stock Analysis report.
Broadcom Inc. (AVGO): Free Stock Analysis report.
Vertiv Holdings Co. (VRT): Free Stock Analysis report.
This article originally published on Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
