Could Amazon Become the Next Great Dividend Stock?

Mega-cap technology firms are notorious for paying a tiny dividend or no dividend at all. A case in point would be Amazon (NASDAQ:AMZN), a Magnificent Seven member that’s a behemoth in e-commerce and cloud computing.

The fact is, Amazon has never paid a dividend. This may be disappointing to investors who cheered other technology leaders, such as Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOG), for starting dividend programs.

Whether Amazon will start paying a dividend in the coming quarters is debatable. However, there is an exchange traded fund (ETF) that may offer a solution for Amazon stock bulls seeking passive income opportunities. With that in mind, let’s consider the potential for AMZN to become the next great dividend stock.

Amazon Can Afford to Pay Dividends

Before determining whether Amazon’s board will initiate a dividend program, we must first answer the question of whether Amazon is financially capable of paying dividends. Rest assured, the answer to that question is definitely yes.

Amazon’s first-quarter 2025 results strongly suggest that the company is in an excellent financial position. During that quarter, Amazon’s net sales grew 9% year over year to $155.7 billion.

Furthermore, the company’s Q1 2025 net income increased to $17.1 billion or $1.59 per share, versus $10.4 billion or $0.98 per share in the year-earlier quarter. Suffice it to say, then, that Amazon is a revenue-rich and robustly profitable tech titan.

It’s also fair to say that Amazon is flush with cash. As of March 31, 2025, the company reported having $66.207 billion worth of cash and cash equivalents. Also, Amazon had $643.256 billion in total assets and only $176.171 billion in total liabilities (not counting stockholders’ equity).

These recent financial figures should answer the question of whether Amazon is capable of making AMZN stock the next great dividend stock. There’s no doubt that, at least in theory, Amazon could take some of its massive cash pile and deliver it to the company’s shareholders in the form of dividend payments.

Amazon Focuses on Growth, Not Dividends

Let’s not get confused, though. Just because Amazon can pay dividends, this doesn’t necessarily mean that the company’s management wants to pay dividends in 2025.

I searched high and low, but I found no credible evidence that Amazon founder Jeff Bezos or the company’s board of directors wants to start a dividend program. I did, however, find evidence that Amazon tends to invest its profits into growth-focused initiatives.

For instance, Amazon recently committed to invest billions of dollars to build out data center infrastructure in Chile and in Taiwan. Moreover, the company is pursuing investment opportunities to accelerate artificial intelligence (AI) adoption in Saudi Arabia and globally.

In other words, recent developments indicate that Amazon prioritizes growth programs rather than cash rewards for shareholders. This focus on relentless growth may help to explain why AMZN stock has rallied powerfully over the long term.

AMZN Options ETF Offers Dividend-Like Income

The point is that if you sit around and wait for Amazon’s board of directors to announce a dividend program, you may be disappointed. Frankly, there’s little to no evidence suggesting that Amazon will steer away from relentless growth and shift its focus to dividends in 2025 or even in 2026.

There may be a solution for Amazon enthusiasts seeking dividend-like income, however. Be aware, though, that this solution is only appropriate for risk-tolerant investors.

I’m referring to the YieldMax AMZN Option Income Strategy ETF (NYSEARCA:AMZY), which doesn’t technically offer a dividend but does provide cash distributions. Indeed, I think you’ll agree that AMZY’s yield is considerable.

As the fund’s name implies, the YieldMax AMZN Option Income Strategy ETF derives extra income from Amazon stock. AMZY doesn’t directly invest in Amazon stock shares, but it does use options to synthetically participate in the price moves of AMZN stock.

To generate income, the YieldMax AMZN Option Income Strategy ETF uses a covered call strategy and also invests in U.S. Treasury bonds. Individual traders could do this, as well, but it would be time-consuming and would require a certain level of expertise.

It’s much easier to let the fund managers at YieldMax do the legwork with the AMZY ETF. In exchange for this, investors in the YieldMax AMZN Option Income Strategy ETF will have to pay annual operating expenses totaling 1.17% of the share price.

AMZN vs. AMZY: Tough Choices

Here’s the kicker, though. Currently, the YieldMax AMZN Option Income Strategy ETF boasts an annual distribution rate (i.e., an annual dividend-like yield) of 48.84%. Plus, this fund pays out its distributions on a monthly basis.

Before you dive headfirst into AMZY, however, consider that the fund involves derivatives-trading risks. These risks potentially include, among others, “higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.”

Thus, it may be safer to simply own Amazon stock shares in anticipation of share-price growth in the coming years. An imminent Amazon dividend program isn’t likely to happen, though you might try AMZY as a dividend-like alternative if you can tolerate the fund’s notable risks.

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