In this article, we will discuss the best innovative stocks that pay dividends.
Innovation plays a crucial role in today’s market. With the significant attention tech stocks have gained over the past year, it’s clear where investors are directing their funds. Tech firms are leveraging disruptive technologies like artificial intelligence to process vast, complex datasets. In the healthcare sector, advancements in research and development (R&D) have led to life-saving drug therapies and treatments. Meanwhile, the growing impact of climate change is pushing energy and utility companies to prioritize renewable energy sources. Therefore, innovation lies at the heart of every industry today.
Businesses in the US and globally swiftly recognized the influence of innovation on their growth and operations, and they are gradually shaping their activities around it. A recent McKinsey survey of over 1,000 executives revealed that companies with a strong culture of innovation are twice as successful as some of their peers in scaling digital transformations. These innovative firms focus on technologies and changes to their operating models that promote rapid learning and adaptation—essential components of innovation. The report also highlighted that 14 of the top 20 global companies have leveraged innovation to either expand existing markets or create entirely new ones.
Read also: Top 18 Automotive Industry Innovations and Trends
A key component of innovation is R&D, which focuses on systematic and scientific investigation to create new products, technologies, or processes. Through R&D investments, companies can strengthen their abilities, explore fresh ideas, and discover innovative solutions to address customer demands. Businesses worldwide, particularly in the pharmaceutical sector, have boosted their R&D investments to develop new products that meet the demands of their customers. Financial Times reported that R&D in the US has grown in recent decades, increasing from 2.2% of GDP in the 1980s to 3.4% in 2021. This rise is mainly due to the private sector’s contribution, which doubled to 2.5% of GDP. Moreover, the percentage of the population involved in patent creation almost doubled during this time.
It’s not just established companies that are embracing innovation in their operations; the rise of US startups also reflects this trend, as they introduce groundbreaking business ideas previously unheard of. Economist John Haltiwanger found that Americans were starting new businesses at an unprecedented rate. And he’s not mistaken. In 2020, more new businesses were launched than in any previous year, with 2021 following closely behind. According to the Kauffman Indicators of Entrepreneurship, the one-year survival rate for these startups exceeded 80% in 2021, marking the highest rate since 1999. Haltiwanger noted that a surge in new businesses is a strong indicator of job creation, innovation, and productivity growth within the economy. He further said that startup booms not only reflect technological innovation but also significantly drive it. Startups explore how to leverage new technologies, experiment with them, and create new products, pushing competitors to adapt and innovate in response. Research from Texas McCombs, which examined 6,116 patents from the mid-1970s to 2016, highlighted the impact of startups on innovation. The study found that patents from startups were cited 8.5% more each year and 21% more over a nine-year period compared to patents from established companies. With this, we will now take a look at some of the best innovative stocks that pay dividends.
SFIO CRACHO/Shutterstock.com
Our Methodology:
For this article, we scanned Insider Monkey’s database of 912 hedge funds as of Q2 2024 and picked companies that actively prioritize and promote the development of new and groundbreaking ideas, products, services, or business processes. From that list, we picked 10 stocks with the highest number of hedge fund investors and ranked them in ascending order of hedge funds’ sentiment towards them. These companies belong to different sectors, including healthcare, technology, aerospace, and defense.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 49
Caterpillar Inc. (NYSE:CAT) is an American company that specializes in construction, mining, and other engineering equipment. In the early 20th century, the company developed the first effective track-type tractor, commonly referred to as a crawler. This innovation transformed earthmoving and construction machinery by offering improved traction and maneuverability on difficult terrains. It is among the best innovative stocks that pay dividends.
Caterpillar Inc. (NYSE:CAT) has jumped almost 21% since the beginning of 2024, driven by its involvement in several new economic trends. These include the shift towards energy transition and its effect on the company’s sales, as well as its adoption of technology—such as e-commerce and digital tools—to boost its more stable services revenue. In addition, the company is also benefitting from the housing market. Diamond Hill Capital also highlighted this in its Q1 2024 investor letter. Here is what the firm has to say:
“Other top contributors included Allstate, Caterpillar Inc. (NYSE:CAT) and General Motors. Shares of heavy construction machinery manufacturer Caterpillar benefited from a positive US housing market, which despite rising interest rates, is seeing strong demand in the face of relatively short housing supply.”
Caterpillar Inc. (NYSE:CAT) is also a strong company from a dividend point of view. In the second quarter of 2024, the company reported an enterprise operating cash flow of $3 billion. Moreover, it ended the quarter with $4.3 billion available in cash. The company remained committed to its shareholder obligation, returning $0.6 billion to investors through dividends during the quarter.
On June 12, Caterpillar Inc. (NYSE:CAT) declared an 8.5% hike in its quarterly dividend to $1.41 per share. Through this increase, the company stretched its dividend growth streak to 30 years, which makes CAT one of the best innovative dividend stocks on our list. The stock has a dividend yield of 1.60%, as of September 18.
The number of hedge funds tracked by Insider Monkey owning stakes in Caterpillar Inc. (NYSE:CAT) grew to 49 in Q2 2024, from 45 in the previous quarter. These stakes have a total value of $6.4 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q2.
9. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 50
Honeywell International Inc. (NASDAQ:HON) is a North Carolina-based company that offers customers in a wide range of industries. The company developed the thermostatic expansion valve (TXV), a component used in refrigeration and air conditioning systems. The TXV controls the flow of refrigerant, helping to maintain the correct temperature and pressure, which enhances the efficiency of cooling systems. The stock is down by over 3% since the start of 2024 because its industrial automation sector saw a decline. This downturn reflects customers’ reluctance to make new investments amid the current economic uncertainty.
However, in the second quarter of 2024, Honeywell International Inc. (NASDAQ:HON) reported strong earnings, consistently meeting or surpassing its guidance across all metrics despite navigating a dynamic operating environment. While Aerospace remains a key driver of growth, the company observed broader contributions from its portfolio, with three out of four segments showing positive growth for the quarter. Additionally, all four segments experienced sequential growth, reinforcing confidence in the anticipated acceleration of organic growth in the second half of the year.
Investors are also inclined to Honeywell International Inc. (NASDAQ:HON) because of its cash position and its consistent progress in capital deployment strategy. In the most recent quarter, the company reported an operating cash flow of $1.4 billion and its free cash flow came in at $1.1 billion. In addition, it allocated $6.4 billion towards mergers and acquisitions, dividends, share repurchases, and capital expenditures, including the completion of its $5 billion acquisition of Access Solutions.
Honeywell International Inc. (NASDAQ:HON), one of the best innovative stocks that pay dividends, has raised its payouts 14 times in the past 13 consecutive years. The company’s quarterly dividend currently sits at $1.08 per share for a dividend yield of 2.14%, as of September 18.
At the end of Q2 2024, 50 hedge funds tracked by Insider Monkey reported having stakes in Honeywell International Inc. (NASDAQ:HON), compared with 52 in the previous quarter. These stakes have a consolidated value of over $1.07 billion.
8. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 50
Texas Instruments Incorporated (NASDAQ:TXN) is an American multinational semiconductor company that produces analog and embedded chips. The company is recognized for creating the first commercial silicon transistor in 1954, a breakthrough that transformed the electronics industry. They were also early innovators in integrated circuit development, often referred to as chips or microchips. TI’s integrated circuits were essential in reducing the size of electronic components and advancing modern computing and communication technologies. Additionally, the company launched the first handheld electronic calculator, the TI-2500, in 1967. It is among the best innovative stocks that pay dividends.
The analog chip industry is facing one of its most significant downturns, and Texas Instruments Incorporated (NASDAQ:TXN) is struggling to manage this difficult period. Despite the challenges, the company is making progress with its resources. Over the past year, it has invested $3.7 billion in research and development (R&D) and selling, general, and administrative expenses (SG&A), spent $5.0 billion on capital expenditures, and returned $4.9 billion to shareholders. The company has also updated its forecasts for free cash flow per share under different recovery scenarios for 2026, projecting a range of $8 to $12. Its strong track record of cash flow and dividend growth continues to make it a solid long-term investment.
In the second quarter of 2024, Texas Instruments Incorporated (NASDAQ:TXN) generated $1.6 billion in operating cash flow and its free cash flow was $507 million. The company returned over $1.1 billion to shareholders through dividends. In addition to its commitment to shareholder return, Texas Instruments also practices dividend growth. The company’s dividend growth streak currently spans over 12 years. It pays a per-share dividend of $1.30 every quarter and has a dividend yield of 2.57%, as of September 18.
As of the close of Q2 2024, 50 hedge funds owned stakes in Texas Instruments Incorporated (NASDAQ:TXN), up from 49 in the previous quarter, as per Insider Monkey’s database. These stakes are collectively valued at over $2.7 billion. With over 4.2 million shares, First Eagle Investment Management was the company’s leading stakeholder in Q2.
7. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 54
International Business Machines Corporation (NYSE:IBM) ranks seventh on our list of the best innovative stocks that pay dividends. The multinational tech company, initially recognized for its punch card machines, smoothly transitioned to digital computers as they emerged as the new technological standard. Over time, it achieved major advancements in software, computer memory, databases, personal computers, and, more recently, cognitive computing. These pioneering innovations laid the groundwork for the development of billion-dollar enterprises.
Today, International Business Machines Corporation (NYSE:IBM) is concentrating on two main technologies: artificial intelligence (AI) and cloud computing. Since CEO Arvind Krishna assumed leadership in 2020 and refocused the company on these areas, it has experienced a consistent increase in revenue. The company is currently unique in offering a comprehensive technology stack through its Watsonx platform, along with consulting services for the implementation and management of generative AI. While the stock did not perform exceptionally well over the past decade, its strong potential in the AI sector is driving impressive returns this year. Since the start of 2024, the stock has surged by 32.5%, and in the past year, it returned nearly 48%.
In the second quarter of 2024, International Business Machines Corporation (NYSE:IBM) reported revenue of $15.7 billion, which showed a 2% growth from the same period last year. The revenue also beat analysts’ expectations by $147 million. The company exhibited strong cash generation performance. In the first six months of the year, it generated $6.2 billion in operating cash flow and its free cash flow amounted to $4.5 billion. Based on the results from the first half of the year, the company is increasing its full-year forecast for free cash flow, now anticipating it will exceed $12 billion.
On July 29, International Business Machines Corporation (NYSE:IBM) declared a quarterly dividend of $1.67 per share, which was in line with its previous dividend. The company has been rewarding its shareholders with growing dividends for the past 29 years consistently. Moreover, in the most recent quarter, it returned $1.5 billion to investors in dividends. The stock supports an impressive dividend yield of 3.12%, as of September 18.
Insider Monkey’s database of Q2 2024 indicated that 54 hedge funds owned stakes in International Business Machines Corporation (NYSE:IBM), growing from 49 in the previous quarter. These stakes have a total value of $837.5 million. Cliff Asness’ AQR Capital Management was the company’s leading stakeholder in Q2.
6. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 58
Hewlett Packard Enterprise Company (NYSE:HPE) is a Texas-based multinational information technology company that provides innovative, open, and intelligent technology solutions through a service-based approach. It is among the top three companies responsible for inventing inkjet printers, a breakthrough in printing technology. The company also created the world’s first programmable pocket calculator. Additionally, it developed the atomic clock, which can synchronize global time with an astonishing accuracy of one-millionth of a second.
Hewlett Packard Enterprise Company (NYSE:HPE) reported a strong third quarter, highlighted by impressive revenue growth, particularly from its AI system conversions, alongside improved profitability. The company’s revenue for the quarter came in at $7.7 billion, up 10% from the same period last year. These results demonstrate the company’s progress in executing its edge-to-cloud strategy across networking, hybrid cloud, and AI. Significant innovation throughout the portfolio has enhanced its relevance to customers and positioned the company to continue delivering profitable growth for shareholders. Since the start of 2024, the stock has delivered a nearly 7% return to shareholders.
During fiscal Q3 2024, Hewlett Packard Enterprise Company (NYSE:HPE) generated $1.15 billion in operating cash flow and its free cash flow came in at $669 million. During the quarter, the company returned $221 million to shareholders through dividends and share repurchases. It has been paying regular dividends to shareholders since 2015, which makes HPE one of the best innovative stocks that pay dividends. The company offers a quarterly dividend of $0.13 per share and has a dividend yield of 2.87%, as recorded on September 18.
Hewlett Packard Enterprise Company (NYSE:HPE) was a popular buy among hedge funds in Q2 2024 as hedge fund positions in the company jumped to 58, from 49 a quarter earlier, according to Insider Monkey’s database. The stakes owned by these hedge funds have a consolidated value of $1.6 billion.
5. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 66
An American multinational conglomerate, 3M Company (NYSE:MMM) ranks fifth on our list of the best innovative stocks that pay dividends. Earlier this year, the company made a significant shift by spinning off its healthcare division and reducing its dividend by 50%. Investors reacted negatively to the dividend cut, especially since the company had maintained a 66-year track record of consistent dividend growth before making this decision.
Despite the negative reactions, this situation may have been a blessing in disguise for 3M Company (NYSE:MMM), as the dividend cut has proven beneficial. The stock has surged by an impressive 44% in 2024 so far, driven by the company’s stable earnings in recent reports. In the second quarter of 2024, it reported revenue of $6.2 billion, which although fell by 25% from the same period last year, beat analysts’ estimates by $425.8 million. In the recent earnings report, the company’s CEO emphasized three main priorities: achieving consistent organic revenue growth, enhancing operational efficiency, and strategically allocating capital. He expressed his long-standing admiration for 3M’s history of innovation and his enthusiasm for leading the company and the opportunities that lie ahead.
3M Company (NYSE:MMM) is famous for creating the iconic Post-it Notes, now a staple in offices, schools, and homes globally. It also invented Scotch tape in 1930, originally developed for sealing cellophane food packaging. This clear adhesive tape quickly became popular due to its versatility, being used for everything from gift wrapping to everyday household tasks.
In addition to strong sales, 3M Company (NYSE:MMM)’s cash position was also in place. In the most recent quarter, the company generated an operating cash flow of $1 billion and its free cash flow amounted to $1.2 billion. Despite reducing its dividends, the company remained committed to its shareholder return, paying $786 million to investors through dividends and share repurchases in Q2 2024. It offers a quarterly dividend of $0.70 per share and has a dividend yield of 2.10%, as of September 18.
According to Insider Monkey’s database of Q2 2024, 66 hedge funds owned stakes in 3M Company (NYSE:MMM), up from 64 in the preceding quarter. These stakes are worth over $3.1 billion in total. With 4 million shares, Millennium Management was the company’s leading stakeholder in Q2.
4. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Intel Corporation (NASDAQ:INTC) is a California-based company that manufactures and designs computer components and semiconductors. The company is well-known for its pioneering achievements in microprocessor technology. In 1971, it developed the Intel 4004, the first commercially successful microprocessor. This innovation transformed computing by combining the functions of numerous transistors into a single chip, leading to smaller, faster, and more powerful computers.
Intel Corporation (NASDAQ:INTC) has had a tough 2024 as the stock fell significantly by over 55% since the start of 2024. Moreover, the company reported mixed earnings for the second quarter of 2024. Its revenue came in at $12.8 billion, down 1% from the same period last year. The revenue also missed analysts’ consensus by $148 million. This performance was disappointing, despite achieving significant milestones in product and process technology. Results were affected by challenges with gross margins due to the rapid increase in AI PC product production, higher-than-usual charges from non-core businesses, and the effects of unused capacity. This was also highlighted by Invesco Distributors, Inc. in its Q2 2024 investor letter:
“Stock selection in the industrials and health care sectors detracted from relative performance during the quarter. Selection and an underweight in consumer staples also hurt relative return as the sector was one of just two index sectors with a positive return for the quarter.
Intel Corporation (NASDAQ:INTC): Shares declined after the semiconductor company reduced its second quarter revenue and earnings guidance. Investors also appeared concerned about the future of its foundry business and lack of AI market share gains.”
That said, by implementing spending reductions, Intel Corporation (NASDAQ:INTC) is proactively working to enhance its profitability and strengthen its balance sheet. These measures are expected to significantly improve liquidity and lower the debt balance while allowing for strategic investments that will create long-term value for shareholders. Currently, the company’s cash position provides some relief for investors. It ended the quarter with $11.3 billion available in cash and cash equivalents, up from $7 billion six months ago.
In addition, Intel Corporation (NASDAQ:INTC) generated $2.3 billion in operating cash flow during Q2 2024, which was sufficient to cover its dividend payments worth $0.5 billion. The company pays a quarterly dividend of $0.125 per share for a dividend yield of 2.35%, as of September 18. It is among the best innovative stocks that pay dividends.
Intel Corporation (NASDAQ:INTC) was a part of 75 hedge fund portfolios at the end of Q2 2024, compared with 77 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total of nearly $2 billion.
3. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 84
Pfizer Inc. (NYSE:PFE) ranks third on our list of the best innovative stocks that pay dividends. The American multinational and biotech company created a type of santonin for treating intestinal worms that quickly became popular due to its effectiveness. One of the founders, Erhart, used his expertise in confectionery to add almond-toffee flavoring to the medicine, making it more palatable. Additionally, the company began producing citric acid during the rise of popular drinks like Coca-Cola, which relied on citric acid as a crucial ingredient. This product soon became Pfizer’s main offering and significantly contributed to the company’s growth in the following decades.
In the second quarter of 2024, Pfizer Inc. (NYSE:PFE) generated $13.3 billion in revenues, up 4.3% from the same period last year. The company’s revenue has struggled to regain its former strength since the company lost the benefits from its COVID-19 vaccine. However, the company’s real appeal has not been its revenue but its dividends. It has paid regular dividends to shareholders for the past 85 years, maintaining an impressive and lengthy streak. Moreover, the company has raised its payouts for 14 consecutive years. In the most recent quarter, it paid nearly $5 billion to shareholders through dividends. Pfizer Inc. (NYSE:PFE) currently pays a quarterly dividend of $0.42 per share and has a dividend yield of 5.64%, as of September 18.
As per Insider Monkey’s database of Q2 2024, 84 hedge funds owned stakes in Pfizer Inc. (NYSE:PFE), growing from 77 in the previous quarter. These stakes are collectively valued at over $3.6 billion. Citadel Investment Group owned the largest stake in the company in Q2.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) has played a key role in creating revolutionary devices and services that have transformed the consumer electronics market, including the iPhone, iPad, iTunes, and the App Store, among others. The stock has surged by nearly 19% since the start of 2024 and in the past 12 months, it has delivered a 24% return. The company is delivering strong returns this year, even with some fluctuations in iPhone sales. In fiscal Q3 2024, it reported a 14.5% quarter-over-quarter decrease in iPhone sales, totaling over $39.2 billion.
Apple Inc. (NASDAQ:AAPL)’s overall revenue for the quarter came in at $85.8 billion, which grew by 5% from the same period last year. During the quarter, the company also unveiled significant updates to its software platforms at the Worldwide Developers Conference. This included Apple Intelligence, a groundbreaking personal intelligence system that integrates advanced, private generative AI models into the core of the iPhone, iPad, and Mac. Baron Funds highlighted the strengths in the company’s business in its Q2 2024 investor letter. Here is what the firm has to say about AAPL:
“This quarter we re-initiated a position in Apple Inc. (NASDAQ:AAPL), a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shifts, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on[1]device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
Being a dividend payer, Apple Inc. (NASDAQ:AAPL) has a strong cash position. In the most recent quarter, the company reported an operating cash flow of $29 billion. It returned $32 billion to shareholders through dividends and share repurchases. The company holds a 12-year streak of consistent dividend growth, which makes it one of the best innovative stocks that pay dividends. It currently pays a quarterly dividend of $0.25 per share and has a dividend yield of 0.45%, as of September 18.
Apple Inc. (NASDAQ:AAPL) was a popular stock among elite funds during Q2 2024, as per Insider Monkey’s database. The hedge fund positions in the company jumped to 184 in Q2, from 150 in the previous quarter. The stakes owned by these hedge funds have a collective value of more than $124 billion.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) tops our list of the best innovative stocks that pay dividends. The company invented Microsoft Windows, which is a computer operating system for use on personal computers (PCs). It was the first operating system to offer a graphical user interface (GUI) for IBM-compatible PCs, quickly becoming the dominant player in the PC market. Today, about 90 percent of PCs operate on some version of Windows. The company’s journey in innovation continues as it consistently introduces new and innovative products over the years. Annually, it allocates around 13 to 14 percent of its total revenue to research and development (R&D).
Microsoft Corporation (NASDAQ:MSFT) is seeing strong returns this year, with a surge of over 16% since the beginning of 2024. Additionally, its earnings are robust, attracting considerable interest from investors. In fiscal Q4 2024, the company reported revenue of $64.7 billion, which showed a significant growth of 15% from the same period last year. Its net income of $22 billion also increased by 10% YoY. The company’s impressive performance this fiscal year reflects both its innovation and the ongoing trust of customers. As a platform company, it is dedicated to addressing the crucial needs of its customers through its large-scale platforms while also aiming to lead in the era of AI.
The company’s AI segment was also highlighted by Fred Alger Management in its Q2 2024 investor letter. Here is what the firm said:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the quarter, shares contributed to performance after the company reported strong fiscal third quarter results, underscoring its leadership position in the cloud and highlighted its role as a primary facilitator and beneficiary of AI adoption. Company revenue growth, operating margin, and earnings growth surpassed consensus expectations. The utility scale Azure cloud business grew 31% in constant currency of which 7% was AI related versus 3% two quarters ago. Further, management noted most of the AI revenue continues to stem from inference rather than training indicating high quality AI applications by Microsoft’s clients. Management also indicated that the significant cost-cutting programs in corporate America are done, suggesting that the cost optimization headwinds previously impacting Azure’s growth are over. Separately, management provided color on their new AI-productivity tool, Copilot, noting that approximately 60% of Fortune 500 companies are already using Copilot, and that the quarter witnessed a 50% increase in Copilot assistance integration within Teams. We continue to believe that Microsoft has the potential to hold a leading position in AI, given its innovative approach and demonstrated high unit volume growth opportunity.”
Microsoft Corporation (NASDAQ:MSFT) is also a reliable dividend payer with a strong cash position. The company generated $37 billion in operating cash flow during the quarter, up from $29 billion in the prior-year period. It also paid $8.4 billion to shareholders through dividends and share repurchases. On September 17, the company declared a 10.7% hike in its quarterly dividend to $0.83 per share. This marked the company’s 19th consecutive year of dividend growth. The stock’s dividend yield came in at 0.70%, as of September 18.
Overall, Microsoft Corporation (NASDAQ:MSFT) ranks first on our list. While we acknowledge the potential for MSFT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
