It should come as no surprise to anyone that the AMZN stock is currently going through a golden period. The company has been going through major cash and revenue profits this year. But, it is not exactly a new trend, as the pandemic simply went to elevate the growth of this company beyond expectations. And this has raised an important point. It is said that companies that have more than $30 billion in cash along with a cash flow that is quite generous should be sending some of that back to their shareholders. But, this rule isn’t set in stone- something of a market ethos. The AMZN stock currently doesn’t pay any dividends, so should it? Should Amazon keep aside that cash flow and invest it in a completely new policy of dividend?
What if the AMZN Stock paid dividends just like Microsoft or Apple?
If the AMZN stock was to be paying dividends, it would simply follow in the footsteps of its other colleagues that have already done so. Currently, there are just two companies in the stock market who boast of a bigger market cap than Amazon- one of them being Microsoft, and the other being Apple. Microsoft recently offers a dividend yield of 1.1%, whereas Apple gives a yield of 0.7% currently.
These companies have been spending quite a large sum of money on their policies of dividends. As Microsoft brought out more than $15.5 billion from its cap of $49.2 billion so that they can finance their dividends, Apple would be bringing out $14.1 billion of the same. Now, let’s consider the AMZN stock doing the same. If it were to reserve close to 19.2% of the free cash flow as dividend checks, the company would have to spend close to $4.7 billion every year to finance it. While that does sound quite a lot, the AMZN stock will give out a yield of 0.3%.