You might make money on Amazon -- but not in dividend form.
For years, investors may have shied away from buying Amazon (AMZN 3.43%) stock due to its really high share price. But earlier this year, Amazon made the decision to split its stock, making shares more affordable for investors.
If you're looking to add a tech stock to your portfolio as a means of diversification or eager to own Amazon, then you may consider taking that leap, now that the per-share price is lower. But one thing you won't get when you invest in Amazon is a stream of dividend payments.
While many companies that issue stocks pay dividends on a regular basis (with some even steadily increasing their dividends through the years), Amazon doesn't pay dividends to shareholders. But that's not necessarily a bad thing.
Why Amazon doesn't pay dividends
Companies that make money can choose what to do with it. Some might choose to reinvest all of their profits into the business, while some might opt to share the wealth with stockholders in the form of dividend payments.
Neither approach is right versus wrong -- it's really just a matter of what strategy a given company prefers. Amazon's business model has long centered on innovating and branching out into different corners of the market, as evidenced by its foray into the grocery and pharmacy business in recent years. As such, it's easy to see why Amazon doesn't choose to pay dividends -- it would rather use its money to grow as a company.
Whether that's a reason not to invest in Amazon is up to you. If your goal is to secure a steady stream of dividend income in your portfolio, then Amazon is clearly a poor choice. But if you're willing to overlook that absent dividend and focus on growth, then you may decide that Amazon is a buy.
One thing to keep in mind is that companies that pay generous dividends don't always experience the same growth as those that don't. So what you lose in the form of absent dividend payments, you might gain in the form of share-price appreciation -- especially if you load up on Amazon shares now and hold them for many years.
Look at the big picture
Some investors get caught up in the process of chasing dividends, to the point where they put their money into companies that aren't necessarily a great fit for their portfolios. Also, some people mistake higher dividend payments as a sign of financial health. That's definitely not always the case. If you're interested in owning a piece of Amazon and, after doing your research, feel that it's a solid business, then the company's lack of dividend payments shouldn't be the driving factor that prompts you to pass on it.
Dividends are certainly a nice thing to have since you can use them as cash or reinvest them. But you can make plenty of money over time by investing in quality businesses, like Amazon, with growth as a clear top priority.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Maurie Backman has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
FAQs
Amazon's business model has long centered on innovating and branching out into different corners of the market, as evidenced by its foray into the grocery and pharmacy business in recent years. As such, it's easy to see why Amazon doesn't choose to pay dividends -- it would rather use its money to grow as a company.
Why doesn't Amazon offer a dividend? ›
The company has a growth-focused business model, which relies on reinvesting profits into expanding the business. Amazon stock may not be suitable for investors looking to rely on dividends as a long-term or steady income, but it could be rewarding for growth-focused investors.
Does Amazon have good dividends? ›
Amazon is the only company in the S&P 500 with a trillion-dollar market capitalization that doesn't pay a dividend. Microsoft, Apple, Alphabet, and Meta Platforms all pay. Even superhot artificial intelligence stock Nvidia yields 0.02%. It pays 4 cents a quarter.
Has Amazon ever declared a dividend? ›
That has left Amazon and Tesla (TSLA.O) , opens new tab as the only companies in the group that do not pay a dividend. Microsoft's (MSFT.O) , opens new tab payouts date back some 20 years, while Apple (AAPL.O) , opens new tab and Nvidia (NVDA.O) , opens new tab have been paying dividends for over a decade.
Will Amazon pay dividends in the future? ›
Alphabet, Amazon likely to follow Meta by introducing first-ever dividends in 2024.
Which company pays the highest dividend? ›
Overview of the Top Dividend Paying Stocks in India
- Tata Consultancy Services Ltd. ...
- HDFC Bank Ltd. ...
- ICICI Bank Ltd. ...
- Hindustan Unilever Ltd. ...
- ITC Ltd. ...
- State Bank of India. ...
- Infosys Ltd. ...
- Housing Development Finance Corporation Ltd.
Historical dividend payout and yield for Amazon (AMZN) since 2024. The current TTM dividend payout for Amazon (AMZN) as of April 26, 2024 is $0.00. The current dividend yield for Amazon as of April 26, 2024 is 0.00%.
When was the last time Amazon paid a dividend? ›
Amazon (DE:AMZ) does not pay a dividend.
What is the latest dividend for Amazon? ›
Indeed, Amazon remains the only trillion-dollar market capitalization company that doesn't pay a dividend.
How much is Tesla dividend? ›
Historical dividend payout and yield for Tesla (TSLA) since 1971. The current TTM dividend payout for Tesla (TSLA) as of April 30, 2024 is $0.00. The current dividend yield for Tesla as of April 30, 2024 is 0.00%.
Google will pay a quarterly dividend of twenty cents, which is surprising, but also one of the lowest payouts among large tech stocks.
What was Amazon's price before split? ›
Trading began at the new price as of June 6. This year's was the first stock split Amazon had undertaken since 1999, when it executed a 2-to-1 split that brought each share price to $57.50. Prior to its most recent split, a share of Amazon stock was worth $2,785.58, which converted to $139.28 after the 20-to-1 split.
Does Apple pay dividends to shareholders? ›
AAPL 's annual dividend is $0.96 per share. This is the total amount of dividends paid out to shareholders in a year. Apple Inc.'s ( AAPL ) ex-dividend date is February 9, 2024 , which means that buyers purchasing shares on or after that date will not be eligible to receive the next dividend payment.
What will 1 share of Amazon stock be worth in 10 years? ›
Analysts at Coin Price Forecast do offer a 2034 projection for Amazon stock, estimating a 10-year price increase of 276%, to $672 per share.
Is Amazon stock good for long term? ›
Amazon's annual revenue and operating income have more than doubled over the last five years. The company will likely profit from the tailwinds of e-commerce and the cloud market for years. Earnings per share estimates indicate a 66% upside for Amazon's shares over the next two years.
What will Amazon stock be worth in 5 years? ›
Long-Term Amazon Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2025 | $ 230.11 | 28.45% |
| 2026 | $ 295.57 | 64.99% |
| 2027 | $ 379.66 | 111.94% |
| 2028 | $ 487.68 | 172.23% |
2 more rowsAmazon (DE:AMZ) does not pay a dividend.
Why doesn't Google pay dividends? ›
Does Google Pay Dividends? Google has chosen not to pay dividends, primarily due to its strong desire to remain focused on expanding into new business ventures. This sets Google apart as a company continuously seeking innovation, even though some of its endeavors may fail to succeed.
Why doesn't Tesla pay dividends? ›
Tesla has never declared dividends on our common stock. We intend on retaining all future earnings to finance future growth and therefore, do not anticipate paying any cash dividends in the foreseeable future. When was Tesla's initial public offering (IPO)? Tesla's initial public offering was on June 29, 2010.
Is Apple a dividend stock? ›
How much is Apple's dividend? AAPL pays a dividend of $0.24 per share. AAPL's annual dividend yield is 0.56%.
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