Over the past 25 years, shares of Amazon (NASDAQ: AMZN) have skyrocketed 66,570% (as of Sept. 23). This might be the single greatest performer for investors this century. It’s impossible to complain about a gain that turned $10,000 into a whopping $6.7 million.
Shareholders understand that this business has never paid a dividend in its entire operating history. Instead, the “Magnificent Seven” stock‘s leadership team, from founder Jeff Bezos to current CEO Andy Jassy, has opted to allocate capital to growth opportunities to increase revenue and profit far into the future. That playbook has clearly worked.
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And that’s why long-term investors should own shares even though there is no dividend stream.
Image source: The Motley Fool.
Look at a top dividend stock
There is nothing wrong with following an investment approach that emphasizes generating a passive income stream. Investors can choose from blue chip dividend stocks. Coca-Cola is one that comes to mind easily. Its brand gives it a durable competitive strength, the business registers huge profits, and it has an impressive dividend streak going.
While owning this beverage company will surely raise your portfolio’s safety score, it won’t improve the overall return profile. Over the past decade, shares of Coca-Cola produced a total return of 181%.
This gain comes up well short of the S&P 500 index’s performance. At the same time, Amazon shares surged 520% over the past 10 years, building significantly more wealth for investors than the high-quality soft drinks dividend payer.
Believe in the management team
When investors buy a stock, they are demonstrating their belief in the management team. If the plan is to own a company for years and decades, how the C-suite executives make decisions matters immensely. And there are very few areas that have a greater impact on a business’s long-term performance than capital allocation.
Amazon has excelled in this regard. Historically, its focus has been to aggressively invest resources in growth initiatives at the expense of near-term earnings power. For instance, Amazon spent a lot of money building its expansive logistics network, which enabled its online marketplace to provide an exceptional customer experience with fast, free shipping. This established the business as the dominant e-commerce platform.
Amazon Web Services (AWS) was built with the same strategy. The cloud computing segment likely reported losses for several years early on as it invested heavily in technical capacity to scale up its operations. That was the right move. AWS registered a 39% operating margin last quarter (Q2 2026 ended June 30), with its operating income accounting for 60% of the entire company’s total.
In 2026 alone, Amazon projects capital expenditures of $220 billion, 67% higher than the total for 2025. This money is being invested to expand compute capacity to meet strong demand from AWS customers. Given that Jassy is incredibly optimistic about the artificial intelligence revolution, it seems that any excess cash will continue to flow into this infrastructure build-out.
It makes sense why. AWS posted 37% year-over-year revenue growth in Q2 (ended June 30), the fastest pace in 18 quarters. Demand for AI tools is off the charts. The segment’s backlog now sits at $496 billion.
No dividends on the horizon
“Your margin is my opportunity,” Bezos once said.
There’s no better statement that exemplifies the company’s overarching operating blueprint. If Amazon spots an opportunity worth pursuing, such as AI or cloud, it won’t hesitate to go after it. So, it’s unlikely the company will pay a dividend anytime soon, if ever. There are other places that can offer a higher return on invested capital, with the goal of boosting the company’s profit potential well into the future. Amazon will never rest on its laurels.
This philosophy makes it an attractive long-term investment candidate.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
Amazon Has No Dividend. Here’s Why Long-Term Investors Should Own It Anyway. was originally published by The Motley Fool
