For years, investors may have shied away from buying Amazon (AMZN 0.90%) 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 does Amazon not pay a dividend? ›
Does Amazon Pay a Dividend? Amazon does not pay dividends as it prioritizes expansion efforts over distributing profits to shareholders. While some other tech companies like Apple, Microsoft and Cisco do offer dividends, Amazon's focus on growth suggests that dividends may not be on the horizon in the near future.
Has Amazon stock ever paid a dividend? ›
Amazon Dividends FAQ
Does Amazon pay a dividend? No, AMZN has not paid a dividend within the past 12 months.
Will Amazon announce a dividend? ›
Alphabet, Amazon likely to follow Meta by introducing first-ever dividends in 2024 | Morningstar.
Will Google pay a dividend? ›
GOOG does not currently pay a dividend.
Will Amazon or Google ever pay dividends? ›
GOOGL and Amazon.com Inc. AMZN are well positioned to introduce dividends of their own this year, according to an analysis from a team of Goldman Sachs equity analysts led by David Kostin.
How much dividend does Mark Zuckerberg get? ›
With the new dividend, Zuckerberg will receive about $700 million in dividends a year. In recent years, he has received a salary of just $1 annually and no bonus—with his $27 million in compensation in 2022 largely related to personal security expenses.
Does Jeff Bezos earn dividends? ›
This figure may seem surprising to you, and yet it is true. Jeff Bezos gets nothing in dividends.
Which company pays 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.
Does Amazon distribute dividends? We have never declared or paid cash dividends on our common stock.
How much is Apple's dividend? AAPL pays a dividend of $0.24 per share. AAPL's annual dividend yield is 0.56%. When is Apple ex-dividend date?
Is Tesla paying 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.
What is the price prediction for Amazon stock? ›
AMZN Stock 12 Month Forecast
Based on 42 Wall Street analysts offering 12 month price targets for Amazon in the last 3 months. The average price target is $212.36 with a high forecast of $230.00 and a low forecast of $198.00. The average price target represents a 18.35% change from the last price of $179.43.
Is Coca Cola a dividend stock? ›
That makes Coca-Cola a Dividend King. This elite group consists of companies that have increased payments for at least 50 consecutive years. Coca-Cola's stock has a 3.3% dividend yield. That's more than double the S&P 500's 1.4%.
Will Netflix pay a dividend? ›
And with a large amount of debt already on the balance sheet, investors shouldn't expect to receive dividend payments from the company any time soon. For all these reasons, it remains unlikely that Netflix will pay a dividend in the next several years.
Is Disney a good dividend stock? ›
Consumer Services stocks do not always pay a dividend but as The Walt Disney Company pays dividends to reward its shareholders. In the quarter ending September 2024, The Walt Disney Company has declared dividend of $0.9 - translating a dividend yield of 1.21%.
Why do tech companies not pay dividends? ›
Newer companies, or those in the technology space, often opt instead to re-direct profits back into the company for growth and expansion, so they do not pay dividends. Rather, this reinvestment of retained earnings is often reflected in a rising share price and capital gains for investors. Internal Revenue Service.
Why doesn't Apple pay a dividend? ›
However, Apple is still considered to be a growth company. Therefore, it reinvests its retained earnings into developing new projects, acquiring companies, and other growth opportunities. Indeed many tech stocks, and growth stocks in general, do not pay any dividends.
Why own a stock that doesn't pay dividends? ›
Companies that don't offer dividends are typically reinvesting revenues into the growth of the company itself, which can eventually lead to greater increases in share price and value for investors.
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