2,400% Dividend Hike For Major Tech Stock
There’s some breaking news regarding dividends I wanted to share.
A major tech stock has been paying a dividend since 2012.
Most tech companies don’t pay dividends at all, so it’s a little surprising it’s paid a dividend for so long.
But here’s the breaking news: it just raised its dividend by 2,400%!
Now, don’t get too excited and think we’re all about to make millions of dollars in dividends.
The stock is Nvidia (ticker: NVDA), and it’s raising its dividend from a penny to a quarter.
To get the higher payment, you need to own Nvidia by June 3 (Wednesday).
Now, don’t get me wrong, it’s a huge increase.
But 2,400% growth on $0.01 still isn’t a lot of money.
The increase will raise Nvidia’s dividend yield to just under 0.5%.
It’s not 50%, but rather half a percent.
So, the dividend yield is still quite small.
However, we should still talk about Nvidia and its dividend.
Right now, it’s the largest company in the world with a market cap of around $5.2 trillion.
Nvidia makes semiconductor chips, and the growth in artificial intelligence has made the stock price soar.
Nvidia’s stock price is up almost 20,000% over the last decade, making it the best-performing stock in the S&P 500.
Why is Nvidia raising its dividend so much?
Right now, it has the good problem of too much cash.
Last quarter, it made over $50 billion in free cash flow, which was almost double what Nvidia made in the 1st quarter of 2025.
Nvidia’s free cash flow growth has been staggering.
Over the past decade, the company has grown its free cash flow by an average of 50% each year.
And Nvidia’s dividend increase will barely make a dent.
The upcoming $0.25 dividend will cost about $6.25 billion in cash for Nvidia, which accounts for only about 13% of its free cash flow.
A 13% dividend payout ratio is incredibly low and gives it plenty of room to continue its dividend growth.
What are Nvidia’s plans for dividend growth?
Management was pretty vague on its conference call by stating: “We plan to review our dividend on a regular basis as we continue to scale our business.”
But we can use history as a guide.
Nvidia doesn’t regularly increase its dividend like many other companies.
The last time Nvidia raised its dividend was in 2024 when it more than doubled from $0.004 to $0.01.
And the last increase before the one in 2024 happened in 2018.
So, I don’t think we can expect a dividend hike every year.
Certainly not another 2,400% increase.
But over time, Nvidia will continue to raise its dividend.
Over the past decade, Nvidia has averaged a 50% increase in its dividend each year.
Over the long term, its dividend growth rate lines up almost perfectly with its free cash flow growth rate.
And with a low 13% dividend payout ratio, Nvidia has plenty of room to continue its dividend increases.
Do you own any stocks with low dividend yields but are looking for higher payments in the future?
Michael Jennings
Dividend Stocks Research
Category: Dividend Stocks
