Nvidia Can Clearly Afford a Bigger Dividend. Why Its Payout Hasn’t Grown.

Nvidia (NVDA) is printing profits and free cash flow on a scale almost without precedent, yet its dividend has gone nowhere. On Aug. 26, the company reported second-quarter revenue of $96.2 billion, more than double a year earlier, with data-center sales surging 117% year-over-year (YOY) to $89 billion. Those numbers leave little doubt as to whether Nvidia could afford to pay shareholders more.

Despite that capacity, the board left the quarterly dividend unchanged at $0.25 per share. The payout sits exactly where it landed after a dramatic step-up earlier this year, when Nvidia lifted its quarterly dividend from a token $0.01 to $0.25 in May 2026, a 2,400% increase. 

This is now the second-straight declaration at that level, even as revenue and profit have kept climbing. 

The math says Nvidia has the means to raise its dividend further. What it hasn't shown is the intent. So, why hasn't the payout grown since May, and should investors ever expect meaningful increases from here? Let's dive in.

Nvidia Has the Cash to Pay More

Headquartered in Santa Clara, California and valued at roughly $5.2 trillion, Nvidia designs accelerated computing chips and GPUs, networking hardware, and software platforms used across artificial intelligence (AI) data centers, gaming systems, professional visualization, and autonomous vehicle applications.

Nvidia shares closed at $217.55 on Aug. 28. NVDA stock is currently up 18% year-to-date (YTD) gain and up 22% for the past 52 weeks.

The forward price-to-earnings (P/E) ratio stands at 25.5 times, slightly above the tech sector median, while the price-to-cash-flow (P/CF) multiple of 48.2 times is well above the sector median.

Nvidia released its second-quarter fiscal 2027 results on Aug. 26. The company reported revenue of $96.2 billion, which beat the $92.4 billion consensus estimate and rose 106% YOY. This performance was driven by $89 billion in data-center sales, up 117% YOY and representing roughly 92% of quarterly revenue. 

The company generated $63.96 billion in adjusted operating income, up 124% YOY, with a 66.5% margin. Nvidia also delivered $2.22 in adjusted EPS, above the $2.10 forecast. Nvidia’s GAAP net income jumped 126% YOY to $59.69 billion, or $2.46 per diluted share, up from $1.08 in the prior-year period.

On Aug. 26, Nvidia kept its quarterly dividend at $0.25 per share, payable on Oct. 1 to shareholders of record on Sept. 10. The forward yield is about 0.44%. That looks small next to a company that just posted $96.2 billion in quarterly sales and $59.7 billion in net income. Annualized, the $0.25 rate is about $24 billion a year. Nvidia already paid $6 billion in dividends in Q2 2027. Coverage is not the issue. 

Why Nvidia Can Pay More, and Still Won’t

Nvidia’s dividend has not really been ignored. On May 18, 2026, the company raised its quarterly payment from $0.01 to $0.25 per share, a 2,400% increase. It also added $80 billion to its repurchase authorization. Given that sizable reset, another dividend increase only three months later would be unusual.

The company has several competing demands for its cash. Inventories rose to $31.6 billion in Q2 as Nvidia prepares for the Vera Rubin launch. The company is also spending more on research and taking on larger supply commitments.

Receivables increased after Nvidia offered longer payment terms on multiyear customer agreements. Those working-capital needs contributed to operating cash flow of $24.1 billion during the quarter, compared with $59.7 billion in net income.

Nvidia’s expanding partnership with Amazon's (AMZN) Amazon Web Services (AWS) also requires continued investment. On Aug. 26, the companies announced plans to deploy 2 million additional Nvidia GPUs across AWS’ global infrastructure during 2027 and 2028. The collaboration also covers AI factories, CPUs, networking, open models, data processing, and robotics.

Despite those spending needs, Nvidia still returned about $26 billion to shareholders during the quarter. Buybacks accounted for $19.7 billion, while dividends totaled $6 billion. The company also had roughly $99 billion available under its existing repurchase authorization. 

Management has said it intends to return about half of its free cash flow to shareholders this year, and repurchases are its preferred method because they can be adjusted when priorities change.

Nvidia can afford to increase its dividend. However, a larger payout becomes an ongoing commitment, while buybacks give management greater flexibility. Product launches, supply capacity, and share repurchases are likely to remain higher priorities. 

So, can Nvidia raise the dividend? Yes. Should it do so right now? Not if the goal is the highest return per dollar. Investors should expect dividend growth over time, but the next increase is more likely during an annual review than in the next quarter.

Wall Street Sees Growth

Nvidia is expected to release its next earnings report on Nov. 18, and consensus estimates call for October-quarter earnings of $2.48 per share. That would represent 100% YOY growth from the $1.24 per share it earned in the same period last year. Nvidia also expects Q3 revenue of roughly $108 billion at the midpoint, which is slightly above the $104 billion Wall Street estimate.

BMO Capital Markets recently began coverage on NVDA stock with an “Outperform” rating and a $340 target, pointing to potential upside of 55% from current levels. Analyst Harsh Kumar named Nvidia BMO Capital's preferred large-cap semiconductor stock for AI exposure and pointed to the planned launch of the Vera Rubin NVL72 system as an important catalyst.

Raymond James reached a similar conclusion on Aug. 25. The firm maintained a “Strong Buy” rating and raised its target to $352 from $330, implying 60% potential upside. Raymond James' thesis includes a larger contribution from Nvidia’s CPU business over time. 

More broadly, the consensus view across 48 analysts remains a “Strong Buy” rating. The average price target of $324.44 implies potential upside of 48% from current levels.  

Conclusion

Nvidia can afford a bigger dividend, and its small payout ratio leaves plenty of room for future increases. Still, the company is unlikely to make income investors a priority while AI demand exceeds supply and new product launches require heavy investment. Dividend growth will likely resume over time, but gradual increases appear more likely than another dramatic jump. For now, its cash is likely more valuable as a flexible tool for repurchases, partnerships, and ecosystem expansion.