Does Tesla Pay Dividends?

Last Updated on 12/18/2020 by GS Staff

Q: Does Tesla pay dividends to shareholders?

No, Tesla (TSLA) does not pay dividends to shareholders. The company states the following regarding its dividend policy in the 2019 Annual Report,

We have never declared or paid cash dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future.

-2019 Tesla Annual Report

It is not uncommon for companies that are in a high growth phase, like Tesla, to not pay dividends. The typical objective of a growth company is to focus on investing in further growth of the business. For Telsa, this means investing as much as possible into primarily designing, producing, and selling electric vehicles, solar-power (energy generation), and energy storage.

As an investor, you should want Tesla to capitalize on its rapid growth by using all possible funds to attempt to expand and maximize profitability, instead of paying dividends. Shareholders should anticipate being rewarded (potentially) through an increase in the stock price alone as the market takes notice of the company’s prospective growth. Of course, there are no guarantees of a return and loss is always possible with Telsa.

Will Tesla Ever Pay Dividends?

We would be lying to you if we had a yes or no answer. However, if we had to speculate, we would say that a dividend is not likely anytime soon.

Gene Munster, a managing partner at Loup Ventures, recently told Benzinga that a Tesla dividend is unlikely as the company will be using cash to expand over the next 10 years.

Keep in mind that companies typically begin to pay dividends as the business matures and earnings stabilize. It is not uncommon for these mature businesses to be out of the growth phase where they no longer see a need to reinvesting earnings into operations for growth. Instead, a portion of the earnings is paid to shareholders in the form of a dividend. These mature businesses (i.e. Coca-Cola) are often financially stable where investors are confident that a dividend will continue for the foreseeable future.

Telsa is by no means in the mature stage where investors should be expecting a dividend to be paid.

Dividend-Paying Automotive Companies

Here is a list of automotive companies that do pay dividends if you are looking for dividend-paying companies in this sector.

CompanyTickerDividendYield
Ferrari N.V.(RACE)1.230.55%
Toyota(TM)4.242.74%
Honda Motor Co.(HMC)0.732.48%
Harley-Davidson(HOG)0.080.22%
As of 12/18/2020

Note that many people consider Tesla a tech company (i.e. like Google or Adobe) and not an automotive company. However, that topic is for another article.

We will update this article if we get word that Telsa plans to pay dividends. In the meantime, you should not evaluate this company for a potential investment with the idea of future dividend payments being in play.