Income investing

Sure Dividend: Will Tesla Ever Pay a Dividend?

As markets get volatile, investors often seek the safety of companies that pay out a dividend. When traders make big moves in that direction, it tends to deflate the prices of growth stocks rapidly.

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  • But over time for any company, growth will slow. Product lines will mature. And, eventually, a company’s best option for its cash flows might be to send them off to shareholders to enjoy in the form of a dividend.

    Even many high-growth names have found a way to keep up their projects while rewarding shareholders with cash. Big tech names like Apple (AAPL) and Microsoft (MSFT) have been solid dividend payers for years.

    What would it take for Tesla Motors (TSLA) to pay one?

    For starters, shares have already returned about 1,900 percent over the past three years. Dividend yields tend to be in the low single-digits, and take time to grow as a company continues to expand. So it may seem that a growing share price will drive returns for some time.

    Yet, as noted on Sure Dividend, Tesla has been issuing new shares over time, which has diluted existing shareholders. And the company has a rising debt load. These are two signs the company is still in a high-growth phase, and likely won’t pay a dividend anytime soon.

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  • But if the company’s fundamentals improve enough over time, that’s a possibility. But investors shouldn’t hold their breath waiting.

    Go here to read the full analysis of what’s holding back Tesla from paying a dividend.