2 Artificial Intelligence (AI) Stocks That Offer Dividends and Long-Term Returns

Artificial intelligence is a growth topic, so it feels weird to associate AI with dividend stocks. I'm here to tell you that the two can coexist perfectly. Some great dividend stocks are at the center of AI's growth today.

Two wonderful examples immediately come to mind: International Business Machines (NYSE: IBM) and Equinix (NASDAQ: EQIX). Here is why investors can count on these two AI stocks for solid passive income and total investment returns in the future.

IBM continues to evolve

International Business Machines -- or IBM as everyone calls it -- has continued to evolve. From the 1980s to the early 2000s, IBM was a one-stop shop for on-premise IT systems. However, the IT world changed with the emergence of cloud technology. IBM has steadily adapted over the years, spinning off its managed IT business as Kyndryl several years back. IBM stumbled and shrunk for a while but has clawed its way back to growth by focusing on hybrid-cloud solutions, the idea that companies need both cloud and on-premise equipment to meet their needs.

Consistent revenue growth resumed in 2022, and IBM recently tapped the mergers and acquisitions market with a $6.5 billion deal to acquire HashiCorp. The company specializes in automated solutions in hybrid-cloud IT, which IBM says gives it complete end-to-end hybrid-cloud services. HashiCorp does business with 85% of the Fortune 500 and has over 4,400 customers, giving IBM potential cross-selling opportunities over the long term.

2 artificial intelligence (ai) stocks that offer dividends and long-term returns

IBM Revenue (TTM)

Investors hope IBM can carve out its market share as companies with hybrid cloud setups seek new AI solutions.

In the meantime, investors can benefit from a healthy dividend that yields just under 4% today. That's what's cool about dividend stocks: they pay you to hold them. IBM is no stranger to paying dividends; it has paid and raised dividends for 29 consecutive years. A payout ratio of 48% supports the dividend so investors can feel good about its safety moving forward.

Arguably the best real estate play on AI

People are investing in all aspects of AI: chips, software, and more. But what about the real estate? Equinix has you covered there. It's a real estate investment trust (REIT) that owns and operates a network of 260 internet and data centers spread across five continents. In other words, it's a global multi-tenant data center provider. Companies can rent data center space, connect directly to cloud computing and storage, and pay Equinix to manage the infrastructure's day-to-day needs. It's like a data center in a box.

Equinix is a REIT, which makes it an outstanding dividend stock because REITs must pay at least 90% of their taxable income out as dividends. Equinix has paid and raised its dividend for 10 straight years. The company deals with over 10,000 customers, signing them to long-term leases that average over 18 years in the remaining term. Additionally, Equinix has generated 21 consecutive quarterly revenue growth, which shows how resilient the business is on the backs of secular cloud growth in recent years.

The business should remain busy for a while. According to research by Kohlberg Kravis Roberts & Co, global data center demand is expected to grow between 12% and 15% annually through 2030. AI will likely have a significant influence on this.

2 artificial intelligence (ai) stocks that offer dividends and long-term returns

EQIX Dividend (Annual)

Of course, investors will enjoy stellar dividends while holding shares. The stock yields 2.1% today, but the payout has grown by an average of 10.5% annually over the past five years. The current payout is just 54% of funds from operations (a REIT's profits), so investors should look for more increases as AI tailwinds continue fueling consistent growth at the company.

Add it all up, and Equinix has the makings of a solid total return investment.

Should you invest $1,000 in International Business Machines right now?

Before you buy stock in International Business Machines, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and International Business Machines wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $566,624!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Equinix. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.

OTHER NEWS

7 hrs ago

WRC adds Paraguay to 2025 calendar in multi-year deal

7 hrs ago

ICMA, Dynamics Solution and Technology sign MOU

7 hrs ago

Ramaphosa Sworn In For Second Term, Says S/Africans 'Disappointed'

9 hrs ago

Canada: Raccoon attempts to navigate barn wall at Dragon's Edge Riding Academy

9 hrs ago

Biafra agitation a spirit, beyond Nnamdi Kanu, Ekpa – Lawyer, Idam

9 hrs ago

Video: See How Evans Kiratu's Kin Demand for Justice after Learning of His Death

9 hrs ago

Ronaldo deserves to play for Portugal, insists coach Martinez

10 hrs ago

‘England are about to really feel the pressure’

10 hrs ago

Is UnitedHealth Group Stock a Millionaire Maker?

10 hrs ago

Germany Beat Hungary 2-0 To Reach Euro Last 16

11 hrs ago

Is AGNC Investment the Best Dividend Stock for You?

11 hrs ago

New Caledonia independence activist to be detained in France

11 hrs ago

3 Reasons to Buy Nvidia Stock Before June 26

11 hrs ago

‘Some people have turned into monitoring spirits because of Tinubu’ – Joe Igbokwe

11 hrs ago

Ukraine: Dad's gardening partner

11 hrs ago

NATO Nation Supporting Putin? Hungary's Orban Openly Slams Biden's 'Hopeless' War Strategy

11 hrs ago

VIDEO: Hezbollah Mercilessly Pounds Multiple Israeli Targets In Revengeful Retaliation

11 hrs ago

Will Alphabet Be Worth More Than Nvidia by 2025?

11 hrs ago

VIDEO: Pastor Gives Golden Tips to People Looking for Spouses, Warns Church Men Playing Women

12 hrs ago

Has Mnangagwa given up on re-engagement with the West? pts over war vets’ funeral policy

12 hrs ago

Tesla's Car Alarm System is STILL Useless!!

12 hrs ago

How To Find Your Perfect Skin Undertone

12 hrs ago

Zambia ‘gravely concerned’ over Mnangagwa statements

12 hrs ago

Want $1,000 in Dividend Income? Here's How Much You Have to Invest in Walmart Stock

12 hrs ago

Is Buying Stocks When the S&P 500 Hits a New All-Time High a Smart Strategy? History Provides a Clear Answer.

12 hrs ago

Kenya: Protests Against Finance Bill Continue Across Country

12 hrs ago

Details: 7 Dead, Many Seriously Injured after Truck Rams Into Pedestrians in Meru

12 hrs ago

Hamas showed a video of the fights in Rafah

13 hrs ago

What Are Possible Complications Of Ventricular Tachycardia? A Review By Doctors

13 hrs ago

Why Is Amazon Stock Price Soaring?

13 hrs ago

Analyst Emmanuel Acho shows no remorse for Lakers hiring JJ Redick

13 hrs ago

How Coriander Boosts Your Health: Nutrition Professionals Share Their Insights, Tips, And Serving Recommendations

13 hrs ago

3 Incredibly Cheap Fintech Stocks to Buy Now

13 hrs ago

Euro 2024 Power Ranking: Every team rated from worst to best as England trail Austria…

13 hrs ago

Is It Too Late to Buy Canopy Growth Stock?

13 hrs ago

Euro 2024: Proud of this team – Ronaldo reacts to Portugal’s 3-0 win over Turkey

13 hrs ago

NPFL: Youngster Nwosu elated after debut game for Sunshine Stars

14 hrs ago

Gusau to present NPFL trophy to champions, Rangers

14 hrs ago

Euro 2024: Ronaldo sets new record as Portugal crush Turkey 3-0

14 hrs ago

Minimum Wage: Consider NLC’s request – Kenneth Okonkwo tells Tinubu