Amazon’s one of the most widely known and used services. It’s an online store where you can find just about anything (old and used). It’s used by almost every person who has an internet connection, and you find some sweet deals on the website. Amazon has grown so much over the years that people are starting to wonder if Amazon pays a dividend.
We hate to be the bearer of bad news, but the truth is… Amazon doesn’t pay a dividend. Right now, the only way to earn money from Amazon is to attain a profit from selling their stock (that you bought; you can’t expect something like that to replace your full-time income. In this article, we’ll talk about the possibility of Amazon Dividend.
First, let’s talk about why Tech Startups normally don’t pay Dividends:
The main goal of every company is to grow substantially, and as fast as possible. Every company follows a specific pattern to achieve that goal. So to make that happen, reinvesting every penny back into the business is crucial. Doing so, allows companies to acquire new employees, and equipment, and open more facilities.
That’s a phase that every company goes through, and that’s what Amazon’s going through right now. Right now, Amazon needs to reinvest every penny it makes to reach market maturity – a point every company reaches once it’s successful. After that, the need to invest every penny becomes optional, and if Amazon reaches that point, it may start giving dividends.
With how quickly Amazon’s growing, it’ll reach market maturity pretty soon, so it’s highly likely that it’ll start giving dividends, you’ll just have to wait a little longer.
Take Apple, For Example:
As we mentioned every company goes through the growth phase; take Apple, for example. Their company has grown massively and is now one of the top contenders in the digital market. They’ve made many sales throughout the years but also stayed in growth mode for almost a decade. When they reached market maturity, they started paying dividends.
Apple reached market maturity in the year 2012 and released numerous products before that. Apple now pays a dividend every quarter and continues to increase the amount every year. In simple words, this means Apple is a dividend growth stock.
What’s a Dividend Growth Stock?
A growth stock refers to a company that doesn’t just pay a dividend but increased the dividend amount consistently over a specific time period. Take this chart, for example.
In simple words, it’s as if you’re getting paid more and more without increasing your workload. That’s not something every company can afford to do, so only the most successful companies (like Apple) can do this. So only a limited number of companies can afford to increase their dividend every year or so.
Companies like Samsung Electronics and Apple can increase their dividend every year as they’re two of the most successful companies out there. That doesn’t change even if they’re seeing a downfall in sales and profits. It stays on like a filter of some sort. Some day, Amazon will be among these companies, and it’ll start paying dividends. To get a feel of what it’s like to invest in dividend growth stocks, take Johnson & Johnson’s company, for example.
They’ve been increasing their dividend for almost 57 years! In 1972, the dividend value used to be $0.008332 per share every year. That amount has increased to $3.8 as of today, and although that might not seem like much, it’s a lot more than what you’d expect.
For example, if you bought 10,000 dollars’ worth of JNJ stock in 1972, you’d earn a total of 102 shares, and a small dividend. From that, you would’ve earned about $714,705.94! excluding any reinvested dividends, something that’s not always the case, so this amount is only a minimum estimate.
So if Amazon reaches market maturity, it could potentially afford growth stocks, so that means it’s likely to increase its Amazon Dividend You amount every year, we just have to wait for some time. And judging by how fast it’s growing, it’ll reach market maturity really soon.
In this article, we’ve mentioned why there’s no Amazon dividend as of now and listed how likely it is for Amazon to start paying dividends in the near future. We hope you find this article useful, and if you have any further queries or would like to add something to this article, feel free to comment down below, and we’ll try to respond to as many queries as we can!
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