Nvidia (NVDA 4.45%) remains one of the hottest artificial intelligence (AI) stocks on the market. But did you know that the company also pays a dividend? And something strange happened to this dividend earlier this year.
Nvidia made a surprising dividend change in 2024
Most profitable companies that experience rapid growth in their sales base opt to up their dividend payments over time. The opposite is true for Nvidia. In 2020, the company was paying a quarterly dividend of $0.16 per share. In 2021, the quarterly payout was lowered to $0.04 per share. And then in early 2024, it was lowered again to just $0.01 per share per quarter. All of this has brought Nvidia's dividend yield down to just 0.02%, with a payout ratio of merely 1%.
NVDA Dividend Yield data by YCharts
Of course, Nvidia isn't struggling financially. Since 2020, shares have risen in value by more than 1,000%, buoyed by a massive surge in demand for AI GPUs -- a segment of the market in which Nvidia maintains a market share of 70% to 95%.
The real reason Nvidia's dividend payout appears to be getting lower and lower is that the company's share price has risen so substantially over such a short period of time that management has opted for stock splits. Earlier this year, for example, the company enacted a 10-for-1 stock split. Adjusted for this stock split, the current $0.01-per-share quarterly dividend is really equivalent to $0.10 per share on a pre-split basis -- more than double the previous dividend payout. The same was also true in 2020, when the company split its shares 4 for 1.
There's still no doubt that Nvidia remains a growth stock, not an income stock. But don't let the top-line numbers fool you -- Nvidia continues to up its dividend rate, a reality somewhat masked by massive stock splits.
