Does Tesla Pay Dividends in 2024? TSLA Dividend History

Does Tesla Pay Dividends?

The short answer is no. Elon Musk’s carmaker has never paid dividends on its common stock. But why has it taken this stance, and will there ever be a Tesla dividend? Read on to find out.

Tesla currently has a market capitalization of about $525.17 billion, which makes it the largest automaker and electric vehicle manufacturer.

As such, as of April 2024, it ranks 15th among the largest companies in the world, in line with the best tech stocks to watch. Tesla had a share price of approximately $164.90 at the time of writing.

Table of Contents Table of Contents

1. Does Tesla Pay Dividends?
2. Key Takeaways
3. What Are Dividends?
4. Tesla’s Business Model Explained
5. Why Doesn’t Tesla Pay Dividends?
6. Will Tesla Pay Dividends?
7. How Many Companies Pay Dividends?
8. The Bottom Line
9. FAQs
10. References

Show Full Guide

Table of Contents

1. Does Tesla Pay Dividends?
2. Key Takeaways
3. What Are Dividends?
Show Full Guide
4. Tesla’s Business Model Explained
5. Why Doesn’t Tesla Pay Dividends?
6. Will Tesla Pay Dividends?
7. How Many Companies Pay Dividends?
8. The Bottom Line
9. FAQs
10. References

What Are Dividends?

Let’s start off with some basics. Dividends are payments made to investors by companies out of their profits or reserves.

The amounts paid – and how often they’re made – will be decided by their board of directors and approved by shareholders.

While paying dividends may seem unnecessarily generous, they can also benefit the companies by attracting more investors. This increased demand may push up the stock price.

Why Are Dividends Important to Investors?

Dividends are interesting to investors for many reasons. Firstly, they’re a source of extra income, which is always very welcome.

This means people can generate cash from their investments without having to dip into the capital itself. The value of this holding, of course, will fluctuate with the stock price.

They may also accelerate the payback on investment, according to Fidelity, which suggested thinking of this as a “safety-net approach” to stock investing. It stated:

“Nobody knows for sure how a stock is going to behave over time, but calculating a payback period helps establish an expected baseline performance—or worst-case scenario—for getting your initial investment back.”

This means working out how long it would take for the dividend payments to cover your original investment if the stock never sees any price appreciation.

However, dividends can provide more than just an extra financial boost.

Tesla’s Business Model Explained

Tesla is most well known for its innovative electric vehicles and the outspoken views of its chief executive, Elon Musk.

However, Morningstar describes it as a “vertically integrated sustainable energy company” that also makes electric vehicles.

It stated: “The company sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties, including utilities.”

Tesla declares on its website: “We’re building a world powered by solar energy, running on batteries and transported by electric vehicles.”

There are also multiple vehicles in its fleet, including luxury and midsize sedans, as well as crossover SUVs. Global deliveries in 2023 were just over 1.8 million vehicles.

Tesla is currently between two major growth waves, according to its Q4 and full-year 2023 update, published in January 2024.

This is the global expansion of the Model 3/Y platform and the forthcoming global expansion of the next-generation vehicle platform. It stated:

“In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas.”

However, it noted that the growth rate of deployments and revenue in its Energy Storage business should outpace the Automotive business.

Why Doesn’t Tesla Pay Dividends?

So, why doesn’t Tesla pay dividends? Well, it prefers to retain its earnings to finance future growth, which is a common strategy in firms that are focused on expansion.

The argument is that it’s better for the longer-term prospects of the business for it to reinvest profits into making it even bigger.

For example, such companies may opt to use this cash to fund new research projects, expand the product range, or even buy associated businesses.

What Does This Mean for Investors?

In the short term, this approach means investors won’t receive regular payouts from the stock they hold in Tesla. There won’t be a Tesla dividend.

The only potential uplift will be from stock price increases.

Will Tesla Pay Dividends?

So, will Tesla ever pay dividends? For now, it seems unlikely. The Tesla website declares:

“We intend on retaining all future earnings to finance future growth and therefore, do not anticipate paying any cash dividends in the foreseeable future.”

However, Danni Hewson, head of financial analysis at AJ Bell, believes its management could come under pressure to consider Tesla stock dividends if it doesn’t continue expanding.

Introducing a payout could help mitigate investor concern, she suggested, if it ends up being a growth company that isn’t actually growing.

Hewson told Techopedia:

“With companies like Meta seeming to come of age, handing investors a meager, but tangible payout, there will be mounting pressure on Tesla to follow suit.”

Hewson believes much will depend on the coming year and whether new models can reignite excitement and replenish coffers. She added:

“The field has become more competitive and Tesla must invest to further bring down costs in order to persuade middle-income motorists to make the switch.”

How Many Companies Pay Dividends?

Global dividends rose to a record $1.66 trillion in 2023, according to the latest Janus Henderson Global Dividend Index.

The study revealed that 86% of companies either increased their payouts or held them steady during the year.

“We forecast $1.72tn in dividends for 2024, up 3.9% on a headline basis, equivalent to underlying growth of 5.0%,” it stated.

Five Tech Stocks That Pay Dividends

Tesla is not the only tech giant that doesn’t pay a dividend. For example, Alphabet (Google) has never made a payout, and neither has retailer Amazon.

However, there are still a number of household-name technology stocks that do reward their investors with dividends.

Some have done so for years, while for others, it’s a fairly recent move.

The Bottom Line

The fact is that Tesla is adamant that it won’t be making payouts, so you shouldn’t invest in the hope of Elon Musk suddenly changing his mind and introducing Tesla stock dividends.

The company is far too focused on expanding its operations to consider sharing any of its future profits with shareholders.

However, this stance is dependent on it continuing to grow and offering investors the tantalizing prospect of being involved in a mega-giant of the corporate world.

The question ‘When will Tesla pay dividends?’ remains open, as it is unclear whether the company will decide to do so in the future.

If you are considering whether to invest in Tesla, you need to decide if the company’s prospects match your longer-term aims and ambitions.

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