There are few companies in the automobile industry as well-respected as Tesla. The car manufacturer has pushed the limits and expectations of quality and functionality in consumer vehicles. All while creating some of the most in-demand products. Yet, while also maintaining a highly valuable share price, we answer the question; does Tesla stock pay a dividend?
Tesla has undeniable value as a stock option and can yield a massive return on investment. Specifically, the last five years alone have seen the price of the stock return over 827%. Alternatively, it is important to understand whether or not a stock like Tesla pays a dividend.
The Story of Tesla
Before we delve into a potential Tesla dividend, let’s dive into the company as a whole. There isn’t much to say, as everyone has, at one point or another heard the name. Moreover, everyone has in some way been exposed to one of the many vehicles designed by the company.
Specifically, Tesa is an American automotive manufacturer that also develops clean energy. Contrary to popular belief, Tesla Motors was founded in 2003 by Martin Eberhard and Marc Tarpenning and named after the iconic inventor, Nikola Tesla.
In 2004, Tesla would receive its largest investment, from divisive tech tycoon Elon Musk. Specifically, Musk would give $6.5 million to the company, easily becoming its largest shareholder. Subsequently, from 2008 onward, Musk would serve as the company’s CEO.
What initially set the company apart were its developments in the clean energy sphere. Specifically, their work in integrating automobile technology with sustainable energy practices to develop vehicles that were sustainably powered and acceptable for everyday use.
The company first went public in 2010 and saw rapid growth. Specifically, its technology saw an immensely positive reception, leading to the company eventually reaching a market cap exceeding $600 billion.
The market cap of the company currently exceeds anyone in the automotive industry, multiple times over. Their product offerings are diversified and continue to expand with every passing year.
What made Tesla such an attractive investment option was its split-adjusted price after going public in 2010. Specifically, you could buy stock for just over $1 per share. Subsequently, investors were presented with massive returns on their investments.
It is the price and return so far, that almost put Tesla in a league of its own. Tesla has reported that it is expecting to earn $103 billion in revenue in 2023. Additionally, the company has exceeded its earnings-per-share estimates for eight quarters in a row. Thus, showing the momentum behind the company’s continued growth.
Conversely, the question of Tesla’s dividend payout has less to do with its success. Specifically, the question of paying a dividend to investors is a decision entirely made by the upper brass of the company in question.
What is a Dividend and How Does it Work?
The concept of dividends is important in the stock world. Specifically, a dividend is the payout of a company’s earnings to its shareholders. Moreover, it is a practice that is decided upon by the board of directors at a specific company.
A dividend is typically paid out quarterly and could arrive in a variety of forms. Among those is the potential for a cash-paid dividend, or a reinvestment in additional stocks. Alternatively, a dividend yield is the displayed ratio that shows how much is being paid out against the stock price.
Ultimately, dividends can be understood as a sort of reward. Specifically, the company choosing to pay out dividends is choosing to reward investors for their investment by sharing the company’s profit.
Additionally, dividends are common among companies that can usually expect their profits to remain the same. Moreover, they usually arrive in sectors that keep track of their dividend payments. Industries that most often pay dividends are financial institutions, healthcare companies, and various oil and gas companies.
Will Tesla Ever Pay a Dividend?
It is impossible to predict what companies will pay a dividend. Especially because it is completely reliant on a host of factors. However, our best guess is that Tesla will not pay a dividend anytime soon.
Although the company has been growing at a rapid rate, since going public, it was not profitable until 2020. Moreover, the company has been battling debt, and selling shares to cover its losses. Yet, a company losing money will surely not pay a dividend to investors.
Conversely, CNBC reported in 2022 that Tesla was considering a stock split to pay a dividend. Specifically, a filing with the SEC stated that the company sought to ask its shareholders to vote on the prospect of increasing stock numbers to pay a stock dividend.
A stock dividend is a dividend paid to shareholders in additional stocks. Although it may not be cash, it has potential upside for investors. Moreover, it could continue the growth trajectory that the company has been on. only enhanced by its profitability in the last two years.