2 Artificial Intelligence (AI) Dividend Stocks You Can Buy and Hold for the Next Decade

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When people think of artificial intelligence (AI) investing, they often think of explosive growth stocks. But while these high-flyers can add some excitement to your portfolio, they often come with a bellyful of ups and downs.

Fortunately, there's another way to capitalize on the AI ​​boom. A select few businesses are capitalizing on the growing demand for AI products and services and passing on their growing earnings to shareholders through dividends. Here are two of the best AI dividend stocks to buy right now.

No. 1 AI Dividend Stock to Buy: Taiwan Semiconductor Manufacturing

Nvidia The stakes are on fire, and rightfully so. The semiconductor behemoth's latest chips power the latest AI applications. But Nvidia only designs these chips. Taiwan Semiconductor Manufacturing (NYSE: TSM ) actually makes them.

The company known as TSMC is the global leader in semiconductor foundry services with a 62 percent market share, according to technology research firm Counterpoint. The chipmaker's share of the most advanced chips is even more impressive, with some estimates putting it as high as 90%.

TSMC produced 11,895 products for 528 clients in 2023. Key markets include smartphones, AI-focused computing, Internet of Things (IoT) devices, automotive technology, and consumer electronics. Its customers include many titans of the tech world, viz appleNvidia, and Tesla.

TSMC has a symbiotic relationship with its clients. As these highly successful companies scale their operations, TSMC grows its business with them. These winning partnerships have helped the chip leader grow its sales and earnings by more than 17% annually since becoming a public company in 1994.

This impressive profit growth has fueled strong cash returns to shareholders. TSMC hasn't cut its dividend since it began rewarding investors with cash payouts in 2004. Its shares are currently yielding a solid 1.2%.

Better still, TSMC is poised for even stronger growth in the coming years. Its revenue rose 30 percent in May, driven by rising demand for AI chips.

No. 2 AI Dividend Stock to Buy: Microsoft

Consider adding another dividend-paying AI powerhouse to your portfolio. Microsoft (NASDAQ: MSFT ). The tech colossus is one of the most profitable businesses on the stock market today, and the AI ​​boom is poised to turbocharge its growth.

Microsoft made a bold move to secure its place as the exclusive cloud computing platform for OpenAI as early as 2023. Its multibillion-dollar investment in the creator of ChatGPT has pushed Microsoft into the AI ​​race, and the software giant is moving aggressively to secure it. an important position.

Microsoft moved quickly to add AI-powered “copilots” to its popular software offerings. Copilot can draft emails in Outlook for Microsoft 365, suggest formulas in Excel spreadsheets, and create meeting notes in Teams. Corporate adoption of these AI-powered productivity tools is strong. About 60% of the Fortune 500 already use a Copilot service, CEO Satya Nadella said during the company's earnings call on April 25.

Additionally, Microsoft's Azure cloud infrastructure platform is expanding rapidly thanks to the growing demand for AI services. More than 65% of the Fortune 500 are using the company's Azure OpenAI service to build custom generative AI applications. A 31% increase in revenue from Azure and other cloud services helped Microsoft's total revenue rise 17% to $62 billion in the quarter ended March 31.

All told, the tech titan's net profit rose 20 percent to $22 billion in its most recent quarter. Wall Street expects the good times to continue. Microsoft is expected to grow its revenue by more than 16 percent annually over the next half decade. These AI-fueled gains should lead to big profits and total returns for wealth-building investors who buy Microsoft stock now.

Should you invest $1,000 in Microsoft right now?

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Joe Tenebrosso has no position in any stocks. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.

2 Artificial Intelligence (AI) Dividend Stocks You Can Buy and Hold for the Next Decade was originally published by The Motley Fool.

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