Since the start of the year, artificial intelligence (AI) has been abuzz. As the year progressed, the market continued to soar higher, and Wall Street firms raised their targets for several tech stocks. Many hit all-time highs and are on a solid momentum. Investors did not want to miss this opportunity and dived in to grab AI stocks.
The Nasdaq is up 18% and S&P 500 is up 15% since the start of the year. It isn’t too late to join the AI party if you to enjoy passive income as your capital grows. Let’s explore three AI dividend stocks to buy this month that will generate quarterly income for you.
Oracle (ORCL)
Oracle (NYSE:ORCL) is a legacy software business that has been around since 1977. The company has gained momentum and attracted envious partnerships in the past few months. Exchanging hands for $144, the stock is up 38% year-to-date (YTD) and 143% in the past five years. ORCL stock has gone from $104 in Jan to $144 today. Multiple catalysts are working in favor of the stock.
Its quarterly results show that the growth could multiply in the coming months. The revenue jumped 4% year-over-year (YOY) to hit $14.3 billion and the EPS stood at $1.63. It impressed the market with a 44% rise in the remaining performance obligations, a metric that refers to the value of future contracts to $98 billion. This shows that the company will report revenue growth in the coming quarter.
Its partnership with Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA) and ChatGPT developer OpenAI will certainly pay off. The latter will use Oracle’s cloud infrastructure for its AI workload. Oracle has successfully signed 30 AI-related contracts in the recent quarter. As companies transition to the cloud, the demand for Oracle’s services will be on the rise.
Also, the stock has a dividend yield of 1.11% and pays a quarterly dividend of $0.40. The company holds enough liquidity to increase the dividends in the coming quarters. Therefore, Oracle is an ideal combination of passive income and capital growth. While Oracle isn’t mentioned at the top when it comes to AI, it has the potential to become an industry leader and hit $200.
Microsoft (MSFT)
Microsoft’s global presence, innovation and products set it apart from competitors. The company made a timely investment in OpenAI and is already reaping rewards.
Up 24% YTD, MSFT stock is exchanging hands for $460.77 and is inching closer to $500. Yes, the stock isn’t cheap but you will never regret holding Microsoft stock for another decade. A leader in the space, Microsoft is a diversified business with a presence across multiple industries. This ensures that the company enjoys steady revenue growth, no matter how the market is moving.
The biggest revenue-generating segment is its cloud computing platform of Azure, which grew 31% YOY. The company has integrated AI across its wide range of products and services and has become indispensable to organizations.
A powerful player in the AI space, Microsoft easily manages to beat expectations and has achieved its target for each of the last four quarters. The company has a modest dividend yield of 0.70%, and there is room for improvement here. However, your dividend is secure so you can sit back and watch your money grow over the years.
As AI supercharges the business, Microsoft’s cloud revenue could see a significant upside. Furthermore, the stock’s rally is set to continue in 2024 and beyond.
Nvidia (NVDA)
Without a doubt, Nvidia isn’t done yet.
The chip industry darling has had an exceptional year and its growth story is nothing short of phenomenal. However, this stock has a lot of room to run. Trading at $128.28 today, the stock has become cheaper for investors after the stock split. Now is the perfect time to pounce on it. The company is an industry leader making the most of the soaring AI demand.
As long as there is an imbalance in the demand and supply for AI chips, Nvidia is set to grow. There is no other stock that has become as popular as Nvidia this year. Earlier, gaming was its largest source of revenue and the data center growth transformed its journey.
Competitors who are developing AI chips haven’t come even close to Nvidia’s dominance. As a result, its financials are stellar. The first-quarter revenue came in at $26 billion, a 262% YOY jump, and the net income stood at $15 billion.
Although Nvidia has a modest dividend yield of 0.031%, I believe the management could make a change there. After the stock split, we could see Nvidia hike the dividend. It will continue to see capital growth throughout the next year and an improvement in dividend payout could attract more investors. As one of the top AI players today, Nvidia is a stock to buy and hold.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
