Nvidia returned a record $26 billion to shareholders in its fiscal second quarter of 2027 through buybacks and a quarterly dividend that jumped 25-fold to $0.25 per share. Management now plans to return at least half of free cash flow to investors going forward, and Wall Street's free-cash-flow estimates suggest the dividend has room to keep climbing.
Nvidia isn't a stock most investors buy for income. Its trailing dividend yield sat near 0.02% until recently. But in fiscal Q2 2027, the company returned $26 billion to shareholders through share repurchases and dividends, including that 25-fold jump in the quarterly payout.
Nvidia commits half its free cash flow to shareholders
On the fiscal Q2 2027 earnings call in August, CFO Colette Kress said Nvidia plans to return 50% or more of free cash flow, net of "strategic uses," through buybacks and dividends. Management didn't detail what counts as a strategic use, but it likely covers acquisitions and equity investments.
Most of the return will probably keep coming through buybacks, since reducing shares outstanding can lift earnings per share. Nvidia has cut its share count 3.5% over the past five years, but the new framework could accelerate that pace. The company repurchased nearly as much stock in fiscal Q2 alone as it bought back in all of fiscal 2025 ($33.7 billion), after spending $40 billion on buybacks in fiscal 2026.
The dividend could triple within three years
Nvidia generated $127 billion in trailing-12-month free cash flow. Its $6 billion quarterly dividend payment works out to $24 billion annualized, or 18% of that free cash flow. Analysts expect free cash flow to reach $441 billion by fiscal 2029, and if the payout stays roughly proportional, the quarterly dividend could rise at least threefold to around $0.75 per share, or $2.25 a year.
Even after the recent increase, Nvidia's forward yield is about 0.45%, well below the S&P 500's 1% yield. But if free cash flow expands as analysts expect and the dividend keeps pace, the yield on today's share price could approach 1% within three years.
Revenue growth still outpaces the payout increase
The bigger capital returns come as Nvidia's revenue jumped 106% year over year in fiscal Q2 2027. Amazon, Microsoft, and Alphabet remain major customers, but Nvidia also reported a 138% year-over-year increase in revenue from smaller AI start-ups, industrials, and enterprise customers — a segment that nearly matched revenue from big tech. Companies sometimes raise payouts when growth options run dry, but that doesn't appear to be the case here: the step-up in buybacks and dividends comes alongside accelerating sales, not in place of them.
Source: The Motley Fool
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