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

Artificial intelligence is a growth topic, but it feels strange to associate it with dividend stocks. I’m here to tell you that these two can coexist perfectly. There are some great dividend stocks at the center of today’s AI growth.

Two great examples immediately come to mind. international business machine (IBM 0.04%) and Equinix (EQIX 0.04%). Here’s why investors can trust these two AI stocks for solid passive income. and Total future return on investment.

IBM continues to evolve.

International Business Machines, which everyone calls IBM, has continued to evolve. From the 1980s to the early 2000s, IBM was a one-stop shop for on-premises IT systems. However, the IT world has changed with the advent of cloud technology. IBM has steadily adapted over the years and separated its managed IT business into: horse riding few years ago. Although IBM stagnated and contracted for a while, it continued to grow again by focusing on hybrid cloud solutions, an idea that businesses needed. both Meet your needs with cloud and on-premises equipment.

Continued revenue growth resumed in 2022, and IBM recently entered the mergers and acquisitions (M&A) market with a $6.5 billion acquisition deal. Hashkov. The company specializes in automated solutions for hybrid cloud IT, which IBM says provides complete end-to-end hybrid cloud services. HashiCorp does business with 85% of the Fortune 500 and has more than 4,400 customers, providing potential long-term cross-selling opportunities for IBM.

IBM Revenue (TTM) data from YCharts

Investors are hoping IBM can gain market share as companies with hybrid cloud setups look for new AI solutions.

In the meantime, investors can benefit from a healthy dividend that currently yields less than 4%. That’s the cool thing about dividend stocks. Dividend stocks pay you money to own them. IBM is no stranger to paying dividends. Dividends have been paid and increased for 29 consecutive years. A payout ratio of 48% supports the dividend, which can make investors feel good about its safety going forward.

Arguably the best real estate play using AI

People are investing in all aspects of AI, including chips and software. But what about real estate? Equinix solves this. A real estate investment trust (REIT) that owns and operates a network of 260 Internet and data centers across five continents. In other words, it is a global multi-tenant data center provider. Businesses can lease data center space, connect directly to cloud computing and storage, and pay Equinix to manage the day-to-day needs of their infrastructure. It’s like a data center in a box.

Equinix is ​​a REIT, which makes it an excellent dividend stock because REITs are required to pay out at least 90% of their taxable income in dividends. Equinix has paid and raised its dividend for 10 consecutive years. The company deals with over 10,000 customers, signing long-term leases averaging over 18 years for the remaining term. Additionally, Equinix has achieved its 21st consecutive quarterly revenue growth, demonstrating how resilient its business has been in recent years, fueled by long-term cloud growth.

Business should keep you busy for a while. Global data center demand is expected to grow 12% to 15% annually through 2030, according to research by Kohlberg Kravis Roberts & Co. AI is likely to have a significant impact on this.

EQIX Dividends (Annual) Data from YCharts

Of course, investors can enjoy huge dividends by holding stocks. The stock currently yields 2.1%, but dividends have grown an average of 10.5% per year over the past five years. The current payout represents only 54% of funds from operations (the REIT’s profits), so investors should look for more increases as AI tailwinds continue to fuel the company’s continued growth.

Add it all up and Equinix makes for a solid total return investment.