Microsoft earlier this week raised its quarterly dividend rate by 11%. The technology giant, worth north of $2 trillion, has a higher yield than its closest rivals in the stock market.
Of the eight S&P 500 companies with a recent market capitalization of more than $500 billion, only Apple (ticker: AAPL), Microsoft (MSFT), and Nvidia (NVDA) currently have a dividend. Investors would need to go down to the tenth-largest firm in the index, JPMorgan Chase (JPM), to find a yield greater than Microsoft at 0.8%. The bank, as is typical of financial stocks, yields a juicy 2.3%. Along with the dividend increase, Microsoft announced a new $60 billion stock repurchase program.
Dividend, Who?
Though Microsoft stock only yields 0.8%, that tops most of its big tech peers by default.
| Company / Ticker | Recent Price | Market Value (bil) | Calendar 2021 Expected EPS | Dividend Yield |
|---|---|---|---|---|
| Apple / AAPL | $149.03 | $2,463.5 | $3.86 | 0.6% |
| Microsoft / MSFT | 304.8 | 2,290.7 | 8.38 | 0.8 |
| Alphabet / GOOGL | 2,888.6 | 1,931.00 | 101.57 | 0.0 |
| Amazon.com / AMZN | 3,475.8 | 1,760.30 | 53.05 | 0.0 |
| Facebook / FB | 373.9 | 1,054.2 | 14.16 | 0.0 |
| Tesla / TSLA | 755.8 | 748.3 | 5.02 | 0.0 |
| Berkshire Hathaway / BRK.B | 278.2 | 630.4 | 11.96 | 0.0 |
| NVIDIA / NVDA | 223.4 | 556.7 | 4.0 | 0.1 |
| Visa / V | 223.8 | 476.0 | 5.24 | 0.6 |
| JPMorgan Chase / JPM | 158.2 | 472.6 | 14.06 | 2.3 |
| Johnson & Johnson / JNJ | 165.4 | 435.5 | 9.72 | 2.6 |
| Walmart / WMT | 144.6 | 403.1 | 6.24 | 1.5 |
Source: FactSet
Apple, which boasts a $2.46 trillion market value, offers a yield at 0.6%. It most recently raised its quarterly dividend by 7% to 22 cents in April. The company also authorized an increase of $90 billion to its existing share buyback program at the time.
Google’s parent Alphabet (GOOGL), Amazon.com (AMZN), Facebook (FB), Tesla (TSLA), and Berkshire Hathaway (BRK.B) don’t pay dividends. That group, excluding Amazon.com and Tesla, have repurchased billions in stock in the past year—the method of returning capital to shareholders preferred by Berkshire CEO Warren Buffett.
Chip maker Nvidia is the next-largest company after Microsoft that offers a dividend, but it’s not much. Only through rounding up to the nearest 10th does the stock’s dividend yield hit 0.1%.
Visa (V), with a recent $476 billion market value, yields 0.6%. On the market cap ranking, it’s followed by a major dividend uptick with JPMorgan Chase and Johnson & Johnson (JNJ) yielding 2.3% and 2.6%, respectively. Walmart (WMT) rounds out the S&P 500’s top 12 with a 1.5% yield.
It isn’t surprising that the biggest blue-chip stocks don’t offer particularly appetizing dividend yields. Such stocks’ growth prospects and stability mean investors are willing to pay more per share. While the highest dividend yields can look attractive, they’re often too good to be true. Sometimes a cheap stock is cheap for a reason, especially if its dividend is vulnerable to cuts.
Write to Connor Smith at connor.smith@barrons.com