NVDA

NVIDIA Corporation

190.32
USD
1.73%
190.32
USD
1.73%
140.55 346.47
52 weeks
52 weeks

Mkt Cap 475.80B

Shares Out 2.50B

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2 Top Stocks That Pay You to Own Them

In a volatile market, worried investors can get some ease of mind when they see a monthly or quarterly payout in the form of a dividend related to the stocks they own. Whether for steady income in retirement or an easy way to dollar-cost average into a company you like, dividends should be a part of any investor's portfolio. The two stocks we are going to discuss today, Nvidia (NASDAQ: NVDA) and Starbucks (NASDAQ: SBUX), offer a great combination of steady returns and price growth potential, which should appeal to many investors. Considering the quality of these businesses and the fact they will pay you to own them, it might be wise to snatch up some shares. Here's why. 1. Nvidia If you're looking for a dividend play, Nvidia is likely not the first company to spring to mind for many investors. This chipmaker's dividend yield is just 0.1%. However, what this chipmaker lacks in its dividend, it makes up for in cash generation and the opportunity it has ahead. Nvidia is one of the leading chipmakers in several segments, but it is most known for its gaming graphics processing units (GPUs). In fact, in the discrete GPU space, Nvidia held 83% market share in Q3 2021, according to Jon Peddie Research. However, the company is also dominant in other segments as well. 71% of the top 500 supercomputers use Nvidia's chips, and its omniverse software has attracted the world's largest brands like PepsiCo and Amazon. As a result of this leadership, Nvidia has become a major player in the chip space. In the company's fiscal 2023 first quarter (ended May 1, 2022), it generated $8.3 billion, which jumped 46% year over year. What's most exciting, however, is that Nvidia generated $9.5 billion in net income and almost $8 billion in free cash flow over the trailing 12 months. This cash will allow it to fund its innovation to remain on top and extend into lucrative industries, and there's even enough left over to pay a small dividend. The big risk, of course, is that this is a competitive field. Nvidia faces the likes of Advanced Micro Devices and Intel. If the company's innovation falls short, it could lose market share. This hasn't happened yet, and Nvidia has continued to update and create exciting products, but it's something to be aware of. If Nvidia can remain at the top, it could capitalize on some lucrative industries going forward. It has its foot in the door in plenty of tech segments, and when you combine them, Nvidia sees a $1 trillion opportunity ahead of it. It makes sense then that Nvidia wants to funnel most of its available cash into funding growth on those fronts. But that won't always be the case and eventually the profits will make their way more directly into shareholders' investment accounts. Till then, Nvidia is willing to pay you to wait patiently for it to gain prevalence in emerging industries, and you might want to take advantage of that. 2. Starbucks Starbucks might not have a $1 trillion addressable market opportunity ahead of it, but it does have a leading brand reputation in the coffee space, long-term adoption, and a dividend yield of almost 2.5%. Starbucks was known for being "the third place" consumers go after home and work, but when COVID-19 hit, it shifted gears. It now focuses heavily on its digital app, which has been the right move. In its fiscal 2022 second quarter (ended April 3), the company had 26.7 million active rewards members in the U.S., a 17% year-over-year jump. While Starbucks might no longer be a hyper-growth company, its still a growing company with steady financial performance. Since the company came public in 1992, it has increased its earnings per share by over 266,000%. Since 2010, it has been paying out a consistent and growing dividend every quarter. One opportunity that could help Starbucks keep building on its success is China. COVID-19-related lockdowns in China over the past two years have slowed its growth potential in that market, but it's still growing. Just in Q2 the company opened 97 stores there. If COVID-19 restrictions fully ease, Starbucks could see a strong recovery in the region. Starbucks is one of the strongest brands in the U.S., with more than 15,500 stores. The company has seen steady adoption of its mobile app and continues to gain traction in China, despite the turmoil in the region. While this company might not knock the doors off its top-line expansion over the coming decade, it could continue providing steady returns and potentially beat the market if it can keep chugging along. Additionally, it is paying you to hold it, which looks like a deal too good to walk away from. 10 stocks we like better than Nvidia When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Nvidia wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of June 2, 2022 John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jamie Louko has positions in Amazon, Nvidia, and Starbucks. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Intel, Nvidia, and Starbucks. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel, short January 2023 $57.50 puts on Intel, and short July 2022 $85 calls on Starbucks. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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