$3 Trillion Company with No Dividend: Amazon's Unconventional Strategy

Amazon is the only $3 trillion company that has never paid a dividend. The e-commerce and cloud computing giant joined this group recently, crossing the $3 trillion mark for the first time on August 3.

The reason Amazon doesn't pay dividends isn't due to low cash flow. In fact, the company's free cash flow over the past 12 months was an outflow of $7.6 billion, largely due to capital expenditures that exceeded operating cash flow by $66.1 billion.

Amazon plans to spend about $220 billion on capital expenditures this year, with most of it aimed at artificial intelligence and cloud capacity. This is a steep climb from the $48 billion spent in 2023, and the company's net cash spending on property and equipment has risen by nearly threefold since then.

Operating income climbed 43% year over year to $27.5 billion in the second quarter, with Amazon Web Services (AWS) contributing $16.6 billion of that. However, some analysts might question whether shareholders should mind this dividend-free status, given the company's growth prospects and valuation multiples.

AWS revenue rose 37% year over year to $42.2 billion in the second quarter, with management citing growth rates not seen in 18 quarters. The profits are following, with operating income and net income both seeing significant increases.