Foreign media name 5 stable stocks, including TSMC, with reasons to buy

Foreign media have identified five stable artificial intelligence (AI) stocks, including Taiwan Semiconductor Manufacturing Co. (TSMC) and NVIDIA, as compelling investment opportunities for those seeking both growth and dividends. These tech giants hold critical positions in the AI supply chain and are increasingly focusing on shareholder returns.

The selected companies, NVIDIA, TSMC, Google's parent company Alphabet, Microsoft, and Meta Platforms, are not only central to the AI industry but also possess the capacity to distribute dividends. Currently, these companies are reinvesting heavily in AI infrastructure, such as expanding data centers to meet the computational demands of generative AI. NVIDIA and TSMC, in particular, benefit from the sustained demand for AI chips and advanced manufacturing processes.

While the current dividend yields for these AI leaders are generally below 1%, the focus is shifting towards their long-term potential. NVIDIA, for instance, recently announced a significant increase in its quarterly dividend. Analysts note that the primary returns for investors in these AI firms currently stem from performance growth and stock appreciation rather than dividends. However, the payout ratio, the proportion of profits distributed to shareholders, remains a key indicator of future potential, with these tech giants having considerable room for increase compared to traditional high-dividend companies.

As AI infrastructure development progresses, these major tech firms are expected to generate substantial free cash flow. A potential decrease in capital expenditure needs could free up resources for enhanced shareholder returns through higher dividends or share buybacks. Therefore, these AI-focused companies, offering a blend of AI relevance and dividend capacity, are emerging as a new focal point for investors looking for both capital appreciation and long-term cash flow.