Artificial intelligence is a growth topic, so it feels strange to associate it with dividend stocks. What I'm here to tell you is that the two can perfectly coexist. Several high-dividend stocks are at the heart of today's AI growth.
Two great examples immediately come to mind. international business machine (NYSE:IBM) and Equinix (NASDAQ:EQIX)Here's why investors can expect solid passive income from these two AI stocks and Future total return on investment.
IBM continues to evolve
International Business Machines (commonly known as IBM) continues to evolve. From the 1980s to the early 2000s, IBM was a one-stop shop for on-premises IT systems. However, the advent of cloud technology has changed the IT world. IBM has steadily adapted over the years, separating its managed IT business into: Kindril years ago. IBM stumbled and downsized for a time, but got back on track by focusing on hybrid cloud solutions, an idea businesses needed. both Cloud and on-premise equipment to meet your needs.
Consistent revenue growth resumed in 2022, and IBM recently entered the M&A market with a $6.5 billion acquisition deal. Hashi Corporation. The company specializes in hybrid cloud IT automation solutions, and IBM says it will provide complete end-to-end hybrid cloud services. HashiCorp works with 85% of Fortune 500 companies and has more than 4,400 customers, giving IBM a long-term potential cross-selling opportunity.
Investors are hoping IBM can increase market share as companies building hybrid clouds seek new AI solutions.
In the meantime, investors can benefit from a healthy dividend that currently yields just under 4%. That's the great thing about dividend stocks. You get paid for owning it. IBM is no stranger to paying dividends. The company has paid and increased its dividend for 29 consecutive years. The dividend is supported by a payout ratio of 48%, giving investors peace of mind about the safety of the dividend going forward.
Probably the best AI-powered real estate strategy
People are investing in chips, software, and all aspects of AI. But what about real estate? Equinix has you covered. It is a real estate investment trust (REIT) that owns and operates a network of 260 internet and data centers across five continents. In other words, a global multi-tenant data center provider. Businesses can rent data center space, connect directly to cloud computing and storage, and pay Equinix to manage their day-to-day infrastructure needs. It's like having a data center inside a box.
Equinix is a REIT, and REITs must pay out at least 90% of their taxable income as dividends, making it a good dividend stock. Equinix has paid and increased dividends for 10 consecutive years. The company works with more than 10,000 of his customers, with the remaining terms on long-term leases averaging over 18 years. Additionally, Equinix has achieved his 21st consecutive quarter of revenue growth, showing how resilient the company's business is against the backdrop of long-term cloud growth in recent years.
Business should remain busy for some time. According to a study by Kohlberg Kravis Roberts & Co., global data center demand is expected to increase by 12% to 15% annually until 2030. AI is likely to have a major impact on this.
Of course, investors can enjoy impressive dividends while holding the stock. The current stock yield is 2.1%, and dividends have increased by an average of 10.5% per year over the past five years. Current dividends are only 54% of funds under management (REIT earnings), so investors should look for more as AI tailwinds continue to fuel the company's consistent growth.
Add it all up and Equinix delivers a solid total return investment.
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Justin Pope has no position in any stocks mentioned. The Motley Fool has a position in and recommends Equinix. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.
2 Artificial Intelligence (AI) Stocks That Offer Dividends and Long-Term Returns was originally published by The Motley Fool.
