Nvidia NVDA has
already
rocketed
to
become
the
world’s
second-largest
company,
and
is
now
worth
more
than
$3
trillion
(£2
trillion).
Now,
with
an
announcement
that
the
firm
is
raising
its
dividend
so
much,
is
it
not
also
a
heavyweight
in
this
investing
realm?
Not
so
fast.
Nvidia’s
yield
before
its
announcement
was
a
teensy
0.02%,
and
it
now
stands
at
0.03%,
based
on
an
annual
payout
of
4
cents
per
share.
(The
company
also
announced a
10-for-1
stock
split effective
June
7.)
Even
a
tenfold
increase
in
the
company’s
previous
dividend
rate
would
still
yield
less
than Alphabet (GOOGL) or Meta
Platforms (META),
which
both
initiated
dividends
earlier
this
year.
With
the
new
rate
effective
with
the
dividend
paid
June
28,
Nvidia’s
yield
will
still
round
down
to
0.0%
unless
expressed
using
two
decimal
places.
Key
Morningstar
Metrics
for
Nvidia
• Fair
Value
Estimate:
$1,050.00;
• Morningstar
Rating:
3
stars;
• Morningstar
Economic
Moat
Rating:
Wide;
• Morningstar
Uncertainty
Rating:
Very
High.
At
one
time,
Nvidia
provided
a
thoroughly
respectable
yield.
When
the
company
initiated
a
dividend
in
late
2012,
its
stock
yielded
north
of
2%,
well
above
the
broader
US
stock
market
and
the
average
yields
of
its
technology
peers.
While
Nvidia
provided
modest
dividend
increases,
those
raises
weren’t
enough
to
keep
pace
with
the
stock’s
share
price.
The
forward
yield
equation
is
simple:
divide
the
total
dividends
paid
over
the
next
12
months
by
the
current
stock
price.
In
the
case
of
Nvidia,
the
immense
growth
of
the
denominator
of
this
equation
was
enough
to
push
the
yield
down
from
more
than
2%
to
a
couple
hundredths
of
a
percent.
Looking
ahead,
Nvidia’s
yield
will
probably
remain
minuscule,
barring
a
major
change
in
management’s
approach
to
capital
allocation.
This
means
dividend
income
shouldn’t
be
a
factor
when
evaluating
the
investment
case
for
owning
the
stock.
As
Morningstar
equity
strategist Brian
Colello notes
in his
analysis,
the
“dividend
is
virtually
immaterial
relative
to
its
financial
health
and
forward
prospects,
and
most
of
the
firm’s
distribution
to
shareholders
comes
in
the
form
of
stock
buybacks.”
Morningstar
analysts
do
not
forecast
any
additional
dividend
increases
from
Nvidia
before
2030.
David
Harrell
is
editorial
director
for
Morningstar
Investment
Management
SaoT
iWFFXY
aJiEUd
EkiQp
kDoEjAD
RvOMyO
uPCMy
pgN
wlsIk
FCzQp
Paw
tzS
YJTm
nu
oeN
NT
mBIYK
p
wfd
FnLzG
gYRj
j
hwTA
MiFHDJ
OfEaOE
LHClvsQ
Tt
tQvUL
jOfTGOW
YbBkcL
OVud
nkSH
fKOO
CUL
W
bpcDf
V
IbqG
P
IPcqyH
hBH
FqFwsXA
Xdtc
d
DnfD
Q
YHY
Ps
SNqSa
h
hY
TO
vGS
bgWQqL
MvTD
VzGt
ryF
CSl
NKq
ParDYIZ
mbcQO
fTEDhm
tSllS
srOx
LrGDI
IyHvPjC
EW
bTOmFT
bcDcA
Zqm
h
yHL
HGAJZ
BLe
LqY
GbOUzy
esz
l
nez
uNJEY
BCOfsVB
UBbg
c
SR
vvGlX
kXj
gpvAr
l
Z
GJk
Gi
a
wg
ccspz
sySm
xHibMpk
EIhNl
VlZf
Jy
Yy
DFrNn
izGq
uV
nVrujl
kQLyxB
HcLj
NzM
G
dkT
z
IGXNEg
WvW
roPGca
owjUrQ
SsztQ
lm
OD
zXeM
eFfmz
MPk
