Will Amazon Ever Pay A Dividend?

Up to date on January twenty fourth, 2025 by Bob Ciura

Over the previous decade, many expertise shares reminiscent of Apple, Inc. (AAPL), Cisco Methods (CSCO), and extra have initiated dividend funds to shareholders.

Whereas the expertise business has extensively embraced dividends, not all tech corporations pay dividends. One lingering holdout to paying dividends to shareholders is e-commerce big Amazon.com Inc. (AMZN).

Somewhat than return money to shareholders, Amazon continues to plow its money movement again into the enterprise.

The choice whether or not or not an organization ought to pay a dividend relies on many elements. 1000’s of shares pay dividends to shareholders, and an elite few have maintained lengthy histories of elevating their dividends yearly.

For instance, the Dividend Aristocrats are a bunch of 66 shares within the S&P 500 which have raised their dividends for 25+ years in a row.

You may obtain an Excel spreadsheet of all 66 Dividend Aristocrats (with vital monetary metrics reminiscent of price-to-earnings ratios and dividend yields) by clicking the hyperlink beneath:

Amazon’s lack of a dividend actually has not harm buyers so far, as Amazon has been a premier tech inventory.

Over the previous 10 years, Amazon inventory generated returns above 30% per 12 months. However for revenue buyers, Amazon is probably not a horny possibility because of the lack of a dividend fee.

This text will talk about the possibilities of Amazon ever paying a dividend.

Enterprise Overview

Amazon is an internet retailer that operates a large e-commerce platform the place customers should buy just about something with their computer systems or smartphones.

Amazon is a mega-cap inventory with a market cap of roughly $2.4 trillion. It operates by way of the next segments:

North America
Worldwide
Amazon Net Companies

The North America and Worldwide segments embrace the worldwide retail platform of client merchandise by way of the corporate’s web sites.

The Amazon Net Companies phase sells subscriptions for cloud computing and storage providers to customers, start-ups, enterprises, authorities companies, and tutorial establishments.

Amazon’s e-commerce operations fueled its huge income progress over the previous decade. The corporate noticed continued progress in the latest quarter.

Supply: Investor Presentation

Associated: Which is the higher funding, dividend shares or progress shares?

Within the third quarter of 2024, income of $148 billion elevated 10% year-over-year. Excluding foreign money fluctuations, gross sales elevated 10%.

By phase, North America phase gross sales elevated 9% year-over-year, whereas AWS gross sales rose 19% and Worldwide phase gross sales rose 7% excluding foreign money.

Working revenue elevated to $14.7 billion. Web revenue elevated to $1.26 per diluted share, in contrast with $0.65 per diluted share within the year-ago quarter.

Whereas the retail enterprise nonetheless operates at low gross margins, it continues to generate sturdy income progress. Individually, the AWS phase is extremely worthwhile, and is essentially the explanation for Amazon’s spectacular earnings progress. Such sturdy earnings progress improves Amazon’s possibilities of paying a dividend in some unspecified time in the future sooner or later.

That stated, the corporate nonetheless plans to speculate closely in progress, which makes for uneven earnings-per-share from one quarter to the subsequent.

Progress Prospects

As is typical with many expertise corporations, progress funding is Amazon’s prime strategic precedence. That is partly out of necessity.

Issues transfer extraordinarily quick in expertise, which is a extremely aggressive business. Know-how companies want to speculate giant quantities to remain forward of the pack.

Amazon is not any totally different—it’s making main investments to proceed constructing its on-line retail platform. Amazon continues to develop its retail enterprise.

It additionally acquired pure and natural grocer Entire Meals for almost $14 billion. This gave Amazon the brick-and-mortar footprint it desired to additional broaden its attain in groceries.

Amazon isn’t stopping there. Along with the retail business, it goals to unfold its tentacles into different industries as effectively, together with media and healthcare. Amazon has constructed a large media platform through which it distributes content material to its Amazon Prime members.

Making authentic content material is one other extremely capital-intensive endeavor, which would require big sums to ensure that Amazon to compete with the likes of streaming giants Netflix (NFLX) and Hulu, in addition to different tv and film studios.

Now that Amazon dominates retail and media content material, it’s readying a possible transfer into the healthcare business. Extra not too long ago, in 2022 Amazon introduced the acquisition of One Medical in a $3.9 billion all-cash transaction, together with One Medical’s debt. One Medical is a nationwide main care firm.

These investments will gas Amazon’s income progress, which is what the corporate’s buyers are primarily involved with. However, such aggressive spending will restrict Amazon’s means to pay dividends to shareholders, no less than for a while.

Working revenue is predicted to be between $11.5 billion and $15.0 billion, in contrast with $11.2 billion in third quarter 2023.

Will Amazon Ever Pay A Dividend?

Amazon has joined the ranks of worthwhile tech corporations like Apple, Microsoft, and Cisco, all of which generate excessive earnings-per-share. Apple, Microsoft, and Cisco at the moment are blue-chip tech dividend payers.

In idea, Amazon may pay a dividend, as the corporate ought to be worthwhile in fiscal 2023. Amazon’s earnings-per-share are forecast to be $4.84 for fiscal 2024.

The corporate can use its income for plenty of functions, together with debt reimbursement, reinvestment in future progress initiatives, paying dividends, or share buybacks.

If Amazon selected to, it may distribute a dividend to shareholders, though any introduced dividend payout would possible be small, by way of the dividend yield.

For instance, even when Amazon maintained a dividend payout ratio of 25%, which might be acceptable for a growth-oriented tech firm, the dividend of $1.21 per share would symbolize only a ~0.6% yield.

Last Ideas

Amazon has been one of the crucial spectacular progress corporations in historical past. It now dominates the web retail business. It is usually a large cloud providers supplier, in addition to a film studio and content material streaming big.

In the end, an organization has to make the choice to provoke a dividend fee. That is usually accomplished when future progress not requires such heavy funding.

For Amazon, the corporate nonetheless has many new avenues for future growth in thoughts, together with (however not restricted to) media content material, grocery shops, and well being care.

Progress continues to be very a lot the highest precedence for Amazon. Because of this, buyers shouldn’t count on a dividend fee any time quickly.

At Positive Dividend, we frequently advocate for investing in corporations with a excessive chance of accelerating their dividends every 12 months.

If that technique appeals to you, it could be helpful to flick thru the next databases of dividend progress shares: