AI-Powered Dividends
Artificial intelligence (AI) is all the rage right now in the stock market.
Everyone is very excited about it, especially Wall Street.
However, one area where AI hasn’t really shown up is with dividends.
Sure, there are some companies related to AI paying dividends.
A few semiconductor stocks pay a dividend and supply their chips to AI developers.
Utility stocks pay great dividends and supply the power AI data centers need to function.
But these are all companies supplying their products to AI.
Nobody developing AI tools seems to be paying dividends… until now.
RingCentral (ticker: RNG) isn’t a household name.
It’s a cloud-based communications and collaboration platform.
Specifically, RingCentral is a UCaaS provider, which stands for Unified Communications as a Service.
UCaaS hosts all communication in the cloud, including voice calling, video conferencing, chats, and texting on one platform.
It’s popular for businesses and organizations because it lowers costs and works well for remote workers.
But RingCentral is taking it a step further using AI.
RingCentral has an add-on AI receptionist to answer questions and route calls.
Plus, RingCentral can automate transcripts and summarize virtual meetings and phone calls using AI.
RingCentral was a stock market darling during COVID, as its new video conferencing platform took off with so many people working from home.
However, once people returned to the office, RingCentral’s stock crashed in 2021.
But RingCentral’s lean into AI has doubled its stock price in just the last 6 months.
What does its dividend look like?
If you want a company with a long track record, then RingCentral isn’t going to cut it.
The company started paying a $0.075 dividend in March 2026.
But it’s not wasting any time raising its dividend.
RingCentral is raising its dividend payment to $0.125, which is 66% higher than its last payment.
To get the higher payment, you need to own shares in RingCentral by August 5th (Wednesday).
Now, there’s a reason AI companies don’t pay dividends.
Most investors prefer the company reinvest the money into the business rather than pay out a dividend.
Is it a problem for RingCentral?
Based on free cash flow, RingCentral’s new payout ratio is 5%, which means 95% of its cash is free to reinvest into growing the business.
And RingCentral is awesome at generating free cash flow.
Free cash flow is the cash left over for the business after investing in its growth.
RingCentral’s free cash flow margin of 22% is one of the highest in the technology sector and an all-time high for the company.
Free cash flow margin measures how well a company converts revenue into free cash flow, so it’s a really important margin for dividend investors.
Plus, RingCentral’s forward price-to-earnings (P/E) ratio is only 11x, which is almost half the software industry average.
The forward P/E is calculated using next year’s earnings, so a low value means we’re getting the stock at a really great price.
The one downside to RingCentral is its low 1.0% dividend yield.
However, if we want dividends from AI stocks, we can’t be too picky about dividend yield.
And while a 66% growth rate isn’t sustainable forever, RingCentral is certainly committed to continuing its dividend growth.
If you’re patient, and RingCentral continues its aggressive dividend growth, its 1% dividend yield will grow into a really nice income source.
What other AI-related stocks do you own?
Michael Jennings
Dividend Stocks Research
Category: Dividend Stocks To Buy?
