Nvidia's Hidden Dividend Potential

Nvidia's dividend may be small, but it has huge room for growth. The tech giant's payout ratio is much lower than that of other dividend payers.

Nvidia (NASDAQ: NVDA) and the words 'dividend stock' aren't normally mentioned in the same sentence, but maybe they should be. While Nvidia is known as a high-growth, artificial intelligence stock, it's also a growing dividend payer. The company recently hiked its dividend to $1.00 per year.

The payout ratio is a key metric that dividend investors need to track. It measures how much of its earnings a company pays out in dividends. Nvidia's is much lower than Home Depot's (NYSE: HD), at about 10%, which means there's massive room for dividend growth at Nvidia.

Nvidia could quintuple its payout ratio and still be just below Home Depot's dividend commitment. This makes Nvidia a dividend stock well worth considering today, as you get the benefit of a small but growing dividend and a stock with some of the best growth prospects on the planet.