So the S&P just closed above 2,000! How crazy is that? With a new high hit today, I wanted to take a step back from looking at our traditional dividend champions and focus on a company that will one day join their ranks.
Today, Amazon Inc (AMZN) announced they would be purchasing the online video game streaming service Twitch. We all know Amazon is an eCommerce giant, but this move should help them gain a very valuable customer base and transition some concepts that made Twitch successful into their own online streaming services.
Even though Amazon isn’t a dividend stock, I do want to point out that they are a cash generating monster that could one day very easily offer a dividend if they choose. The lack of dividend or high EPS isn’t due to a lack of margin. Instead, it’s a result of the strategy Amazon has been taking. For the last five years, Amazon has treated itself like a growth stock. They reinvest every dollar earned into new services and products to increase their customer base and market share. The hope is that, one day, they will be a dominant force in multiple industries and markets worldwide. It is at that point that they can start shifting away from a high growth strategy.
At this point, Amazon has an extremely high P/E considering the range we look at for dividend stocks. But, they do posses high revenue, low debt/equity and considerable economies of scale. With that in mind, and if you don’t mind holding for 10-15 years, Amazon is at a relatively low evaluation in respect to their 52 week high.
Check out the video below for a full in depth review of AMZN