This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Key Points
- Nvidia's dividend is tiny by design, backed by an ultra-low payout ratio and massive reinvestment needs.
- Buybacks, not the dividend, are the centerpiece of the chip company's capital returns -- and the authorization just got a big boost.
- If earnings continue to compound, the dividend can rise over time without crimping growth investment.
After a monster run over the last two years, Nvidia (NASDAQ: NVDA) is no longer just the leading artificial intelligence (AI) chip supplier; it's also one of the biggest cash machines in tech. The company designs and sells the graphics processing units (GPUs), networking, and software that power generative AI training and inference across cloud providers and enterprise data centers. Investors often ask a simple question amid all the talk of growth: What about the dividend?
The short answer is that Nvidia's dividend exists, but it is intentionally modest. Management raised it during the 2024 stock split and has kept it at this level since then -- yet the yield rounds to near zero. That's not a bug; it reflects a capital-allocation playbook focused on reinvestment and opportunistic buybacks while earnings scale. The sections below explain the why, the how, and what to expect next.
The dividend is small -- and that's deliberate
Nvidia's current quarterly dividend is just $0.01 per share, or $0.04 annually. Given where the stock is trading at the time of this writing, Nvidia's dividend yield is about 0.02%, which is obviously negligible. The company last lifted the payout by 150% alongside its 10-for-1 split in May 2024 and has kept it at that rate since then.
Of course, such a small dividend means that the company is hardly tapping into its earnings power. Using trailing-12-month earnings per share, Nvidia earned roughly $3.51 per share. Against a $0.04 annual dividend, that implies a payout ratio near 1%. In plain English, Nvidia is paying out about $0.01 of every dollar it earns, leaving enormous flexibility to fund growth and still raise the dividend over time.
Buybacks do the heavy lifting
But don't let Nvidia's small dividend fool you. The company is returning meaningful sums of cash to shareholders, just in a different way. Nvidia returns cash primarily through share repurchases.
In late August 2025, the board added $60 billion to the company's buyback authorization. Further, through the first half of fiscal 2026 alone, Nvidia returned $24.3 billion via buybacks and dividends, and as of the second-quarter release, it still had $14.7 billion remaining under the prior authorization -- before the new $60 billion was added.
The tech company has made a habit of routinely deploying billions of dollars per quarter on repurchases as free cash flow swells.
What to expect from the dividend going forward
Two forces will likely guide dividend policy from here: investment needs and earnings power. For now, the company has significant investment needs as it builds out AI platforms like Blackwell at a staggering scale.
On top of aggressively reinvesting in its business, the company will likely continue buying back its stock, as CEO Jensen Huang seems very bullish on the company's growth opportunities. So, as long as the data center cycle remains in hypergrowth mode, investors should expect buybacks to remain the preferred lever for returning capital to shareholders, with the dividend stepping up gradually over time from a very low base. That approach maintains high optionality in case demand shifts -- and it helps Nvidia avoid locking in a significant fixed cash commitment.
So, will the dividend grow over time? Probably. But it's uncertain when increases will come and how big they will be. Further, even Nvidia faces risks. AI spending is cyclical and capital-intensive, competitors are investing aggressively, and export restrictions have already complicated shipments to China.
Even so, Nvidia's recent results (revenue up 56% year over year in the quarter ended July 27, 2025, and guidance calling for another sequential revenue increase) reflect a business scaling rapidly enough to support both reinvestment and rising shareholder returns. If earnings continue to compound, modest dividend hikes remain feasible alongside significant repurchases.
But as long as the company has a massive opportunity set, shareholders shouldn't want dividend increases anyway.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
