3 High-Growth AI Stocks That Actually Pay You to Wait
When investors think of dividend stocks, they usually think of boring companies that deliver single-digit stock returns and pay a few percentage points in dividends. This provides a bit more return security, as the companies are paying out a certain amount of profits each year rather than having to deal with whatever returns the market…
When investors think of dividend stocks, they usually think of boring companies that deliver single-digit stock returns and pay a few percentage points in dividends. This provides a bit more return security, as the companies are paying out a certain amount of profits each year rather than having to deal with whatever returns the market delivers.
However, there is a segment of artificial intelligence (AI) stocks that pay a respectable dividend and are also growing at a fast pace. These three AI stocks pay you a dividend to wait and can provide market-crushing growth. This combination is fairly rare, but I think these three stocks are among the best buys in the market right now.
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While I’m a huge Nvidia bull and it technically pays a dividend, I’m disqualifying it from this list. Its dividend totals a massive $0.01 per quarter, equating to an incredible yield of 0.02%. So while it is technically a dividend stock, it doesn’t pay the kind of dividend to warrant inclusion on this list.
Instead, my top AI dividend stock picks are Taiwan Semiconductor Manufacturing(NYSE: TSM), Microsoft(NASDAQ: MSFT), and Broadcom(NASDAQ: AVGO). These three aren’t paying the largest dividend around, but it’s better than nothing. Taiwan Semiconductor’s and Microsoft’s dividends yield around 1%, while Broadcom’s is a bit smaller at 0.8%. Several other AI stocks pay larger dividends, but I think that misses the point.
What investors should be focused on is total return, which includes both stock price appreciation and dividend yield. When this performance measure is used, it’s clear that this trio has far greater upside than higher dividend-paying AI investments like real estate investment trusts focused on data centers.
Taiwan Semiconductor (or TSMC for short) is a key company in AI. Without it, none of the technology we know today would be possible. It is the world’s leading logic chip fabricator and has production facilities all around the globe.
Management is extremely bullish on AI and believes that the resulting chip revenue will have a mid- to high-50% compound annual growth rate between 2024 and 2029. That’s huge, and the revenue it will add should allow TSMC to increase its dividend over the next few years to a much higher level.
Broadcom is one of its customers and makes custom AI chips, among many other products, and it’s seeing demand explode for these chips as hyperscalers try to find more ways to increase their computing capacity without increasing their spending.
Management believes it will see extensive growth over the next few years within this category. In the fiscal 2026 first quarter (ended Feb. 1), the division that includes custom AI chips delivered $8.4 billion in revenue. By the end of 2027, Broadcom expects custom AI chips to generate $100 billion in revenue alone. That’s huge growth for this product line, and it should help Broadcom’s dividend increase.
Last is Microsoft. If you’re a dividend investor, you’re likely looking for a bit safer investment option, and Microsoft is the perfect example of this in AI. It has a strong base business and is integrating the technology into all of its existing products to increase functionality and drive future growth.
It is also spending a ton on its cloud computing capabilities, which are at the heart of where AI workflows are run. Cloud computing also provides a continuous revenue stream for the company, making the success of this business unit key for future dividend growth. Microsoft isn’t going anywhere, and with its leadership role in AI, I think it’s about as safe a bet as it gets in the stock market.
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Keithen Drury has positions in Broadcom, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
3 High-Growth AI Stocks That Actually Pay You to Wait was originally published by The Motley Fool
