Will Amazon Ever Pay A Dividend?

In the years since the bursting of the “Dot Com” bubble in 2000, a major shift took place in the technology sector. After share prices across the technology sector crashed, investors began to demand the stability of dividends, rather than relying solely on a rising share price for capital appreciation.

Over the past decade, many technology companies such as Apple, Inc. (AAPL), Cisco Systems (CSCO) and others have initiated dividend payments to shareholders. There are now over 300 dividend-paying technology stocks that are every bit as profitable as dividend-paying companies in other market sectors.

One tech company that has not initiated a dividend policy is e-commerce giant Amazon.com Inc. (AMZN). Despite climbing to a market capitalization above $800 billion, with over $220 billion in annual revenue, Amazon still does not pay a dividend to shareholders. This article will discuss the chances of Amazon ever paying a dividend.

Business Overview

Amazon is an online retailer that operates a massive e-commerce platform where consumers can buy virtually anything with their computers or smartphones. It operates through the following segments:

  • North America
  • International
  • Amazon Web Services (AWS)

The North America and International segments include the global retail platform of consumer products through the company’s websites. The Amazon Web Services segment sells subscriptions for cloud computing and storage services to consumers, start-ups, enterprises, government agencies, and academic institutions.

Amazon’s e-commerce operations fueled its massive revenue growth over the past decade. Consider that in 2008, Amazon generated revenue of $14.84 billion. Last year, Amazon brought in revenue of $177.87 billion, for a compound annual growth rate of 28%.

Amazon has continued to generate strong growth to start 2018. Third-quarter sales increased 29% to $56.6 billion.

AMZN Sales

Source: Earnings Slides, page 7

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Disclaimer: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of Sure ...

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