Amazon considering paying dividend like other tech giants, but unlikely due to high debt

From Nasdaq Inc.: 2024-05-07 21:02:36

Meta Platforms (META), Alphabet (GOOG), and Chinese tech giant Alibaba (BABA) have initiated dividends in recent years. The question arises if Amazon (AMZN) should follow suit and start paying a dividend to shareholders. Tech companies typically prefer buybacks over dividends, but Amazon may benefit from appealing to a wider range of investors and its healthy cash flows.

Tech companies often prioritize investing in the business or acquisitions over paying dividends. Amazon’s strong cash flows could support a regular dividend, making the stock more attractive to certain investors. While some argue that Amazon’s slowing growth and stable core business could warrant a dividend, others highlight the company’s ongoing need for substantial investments and debt repayment.

Amazon may not be ready to initiate a dividend given its capital-intensive operations and unpredictable cash flows. The company’s high debt and volatile operating margins distinguish it from other Big Tech peers, making it less likely to pay a dividend in the near future. Investors seeking an AI stock with a dividend may consider HP (HPQ) as an alternative option.



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