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The Metaverse is bursting with potential . It has overtaken the cryptocurrency market as the new investment frontier. Developments like web 3.0 or web3 (blockchain-based, artificial Intelligence-led third-generation internet) will make the internet more powerful and accessible to users. 5G and 6G will make the internet faster and a faster, more powerful internet will drastically improve user experiences in the Metaverse.
Many mainstream companies have been testing the waters, but Meta Platforms, formerly Facebook, has dived in headfirst. A trillion-dollar company does not reimage itself as a Metaverse brand if it does not see the potential for exponential growth and returns.
Dividend-paying Metaverse Stocks require either consistent revenues or must achieve significant growth levels to sustain payments. Investing in the Metaverse provides opportunities to meet both objectives. Owning dividend stocks provides significant benefits to your investment portfolio including earning additional income that you can reinvest to compound your wealth.
In this post, we will explore metaverse-exposed companies that have paid a dividend for at least five consecutive years. We tried to identify opportunities that may not readily be associated with the Metaverse. The three we settled on are Nike (NYSE: NKE), Vodafone Group plc (LON: VOD), and IMB Corp (NYSE: IBM).
What is The Metaverse?
Generally speaking, a metaverse is a virtual world where you can create an avatar and engage in real-world-like activities. Experts will mention terms like; The Metaverse, a metaverse, and a metaverse-adjacent platform. Investing in any of them is considered investing in the Metaverse. We will use companies that show signs of taking advantage of this virtual world as potential Dividend Paying Metaverse Stocks.
The Metaverse
The Metaverse refers to the overarching blockchain-powered, integrated 3D virtual world where you can immerse yourself through your avatar. Virtual reality (VR) headsets make you see through your avatar’s eyes and VR gloves help you feel what it touches.
The Metaverse must have open interoperability. Private ownership is not permitted, and the platform must facilitate interactions among the metaverses within and with external entities like the real world.
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You can replicate nearly all real-world activities in The Metaverse. You can meet and interact with people, attend concerts, study, view, and work on complex designs.
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Metaverses and Metaverse-Adjacent Platforms
Metaverses are blockchain-powered interoperable or restricted virtual worlds. Horizon World by Meta is privately owned and restricted, while Decentraland is member-centric. Decentraland is actively seeking interoperability with other virtual worlds. Non-interoperable blockchain-powered metaverses can become interoperable due to blockchain’s transparency and integratedness.
Metaverse-adjacent virtual worlds like Roblox and World of Warcraft are forms of metaverses, but they may offer both immersive and non immersive experiences and they lack blockchain technology. The absence of a blockchain means they cannot generate in-world non-fungible tokens, among other disadvantages. These platforms still make up the metaverse economy, however.
Nike (NYSE: NKE) – Non Fungible Tokens
- Market Capitalization: 233.51 B
- Price: 148.07
- Consecutive Dividend Payments: > 5 yrs
- Yield: 0.83%
- Dividend (Annualized): $1.22
Fiat money and cryptocurrencies are fungible because they are homogenous, divisible into smaller quantities, and exchangeable. You can divide an Ethereum or Ether into subunits like Gwei, Wei, or Kwei. Non-fungible tokens (NFTs) do not have these characteristics.
You store a unit of NFT data on a blockchain. Each unit is unique and complete, you cannot break an NFT into subunits. NFTs’ individualism makes them ideal for use as certificates of ownership of digital assets like wearables (clothing and accessories worn by your avatar), digital art, or virtual land.
Nike a deeply innovative
Leading digital fashion and gaming brand RTFKT studios sent tongues wagging when it sold out over 600 pairs of digital NFT sneakers in about seven minutes generating over USD 3.1 million in revenue. Nike acquired RTFKT in December, and after concluding the deal, RTFKT co-founder Benoit Pagotto stated;
Nike’s expansion into The Metaverse through RTFKT is in line with the company’s aggressive growth drive. YouTuber, Mr. Fired Up Wealth; is excited about the potential production of physical replicas of digital NFT assets, a feature that could drastically drive consumer interest.
Nike’s 2021 revenues increased by 19% to $44.5 billion, and Nike CFO Matt Fried stated that the company expects over $50 billion in revenue for 2022.
In addition to digital sales, direct-to-customer (DTC) sales drive the company’s revenues. Nike has set ambitious 2025 sales targets for both digital and DTC.
Nike’s sales exceed its five closest competitors, including Adidas, Puma, and Under Armour combined. At the time of writing, five-year earnings growth projections stand at 15.95% per annum. Although Nike’s debt increased, its debt ratio of 0.27 shows lower exposure to increased interest rates.
Nike stock is “overweight” rated by Wall Street analysts, with the company generating $5.96 billion in free cash flow, which indicates dividend payment sustainability.
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Vodafone Group plc (LON: VOD – 5G Leader and Metaverse Advocate
- Market Capitalization: 34.60 B
- Price: 130
- Consecutive Dividend Payments: > 5 yrs
- Yield: 5.92%
- Dividend (Annualized): $1.0284
Digital worlds are web-based platforms, so a better internet improves the user experiences and helps to unleash The Metaverse’s potential. Fifth-generation (5G) network technology is a critical improvement to the Metaverse foundation, providing faster, more reliable internet with superior network capacity.
British-based teleco (Telecommunication Company) Vodafone has been on the cutting edge of several 5G firsts. The best telecos emphasize innovation and partnerships, Vodafone through its many subsidiaries, partners with key players in the telecoms space.
The company completed the first 5G call with Huawei in 2018. This year Vodafone partnered with Samsung Electronics through its subsidiary Vodafone UK to activate the UK’s first 5G Open RAN site carrying live customer traffic. The company now boasts Europe’s largest Next Generation Network (NGN).
Vodafone Partners
Vodafone partners with Cisco, Google, Microsoft, and other major tech companies to provide a secure, reliable 5G network. The teleco demonstrates its dedication to innovation through its 5G lab based in Madrid, Spain, where it has supported over 200 start-ups focused on 5G application development. Vodafone also launched 5G Reality, a virtual and interactive service you can enjoy with VR or AR devices, underscoring its commitment to the Metaverse.
In addition to being an industry leader with stable revenues, Vodafone also has the competitive advantage of significant global operations. Take its Vodacom partnership in Africa, for example. Vodafone takes a diverse approach to increasing revenues. Apart from traditional service upgrade packages, the company is upgrading its M-Pesa payment network to capture digital and financial opportunities.
Vodafone’s large Next Generation Network (NGN) enables market share growth in fixed-line and through customer convergence of fixed/mobile customers.
Vodafone is betting big on business solutions like Software Defined- Wide Area Networking and Internet of Things (IoT) technology leadership to drive revenues.
The company’s growth trajectory is taking shape and despite its capital outlays, its debt to equity ratio stands at 0.9, which is low for the industry. Deutsche Telekom, its biggest competitor in Europe, scores 1.38, for example.
Vodafone free cash flow means it can afford dividend payments. It increased its free cash flow to $13.631 billion or 47.66 % for 2020 over 2019 and to $13.835 or by 1.5% for 2021 over 2020.
All the indicators show that the company is poised to grow and continue paying dividends. Wall Street Journal analysts rate Vodafone a “buy” on average, so do analysts tracked by Yahoo Finance.
IMB Corp (NYSE: IBM) – Cloud Computing, Blockchain, and Artificial Intelligence
- Market Capitalization: 121.54 B
- Price: 133
- Consecutive Dividend Payments: > 5 yrs
- Yield: 4.84%
- Dividend (Annualized): $6.56
The Metaverse needs the remote servers of the Cloud for efficiency, security, unlimited storage, low cost, accessibility, and mobility. Without Cloud technology, virtual worlds like Minecraft would face high data center costs. Roblox runs its own data centers, but after the 73-hour outage in October, investors and users have raised reliability questions. Roblox is spending a fortune to improve its data centers.
Web3 will store data using a blockchain. Blockchain technology facilitates decentralization as each computer within the blockchain will share the same authority level. This promotes transparency and security since changes made by one computer are observable by all within the network.
Blockchain also enables the use of cryptocurrencies, the currency of the Metaverse. But how should you spend your cryptocurrency in the Metaverse? Maybe Artificial intelligence (AI) can provide helpful suggestions. AI will be another critical component of Web3. Machine learning drives AI, and the tech will continue to improve. AI will produce more users and customers for The Metaverse. AI and machine automation will make transitioning between the virtual and physical worlds easier.
Are IBM turning a corner?
Tech giant IBM appears to be awakening from its nap as the changes made to increase revenue are paying off. The company has changed leadership and is selling off less profitable businesses to focus on high-margin revenue drivers.
Despite the slowdown lingering through the last decade, IBM has always turned a profit and maintained high free cash flow rates of around $10 billion. The depressed stock price provides an opportunity for dividend seekers as IBM can afford dividend payments.
IBM provides exposure to the Metaverse as it supplies hardware, software, and services associated with cloud computing, AI, and blockchain construction. Amid increased demand for its core Hybrid Cloud services, the company has either met or outperformed earnings targets in each of the last four quarters.
The tech giant retains a stable debt to equity ratio of 0.87, and revenue projections target a 6% increase for 2022 and 4.10% for 2023. A more positive surprise could lay beyond the horizon if the current revenue trend continues.
IBM is rated “hold” by most Wall St. analysts.
Disclaimer : IBM tend to use a practise called financial engineering when displaying their headline figures. It is important to understand the financial statements to see how they move money around. We discuss this a little in the video below.
Bottom Line
Despite many unknowns about the virtual realms and how they will ultimately coexist with the real world, the Metaverse economy is already here and thriving. Uncertainty increases risk, and higher risk means higher rewards. You can manage your risk by owning established companies currently participating in the Metaverse ecosystem.
Nike (NYSE: NKE), Vodafone Group plc (LON: VOD), and IMB Corp (NYSE: IBM) meet the established Metaverse stock criteria to be considered dividend paying metaverse stocks and are well-positioned to create a strong foothold in the Metaverse economy on which they can build for years to come. In the words of world renown author Nicola Yoon;
“Everything is a risk. Not doing anything is a risk. It’s up to you.”
Don’t get caught out as many did with the cryptocurrency rush. Speak to your financial advisor about investing in the Metaverse today.
Recommendations
Simply Investing Report review – For investors who might like to have all the research done for them
Sure Dividend – Ben and his team help individual investors build high-quality dividend growth portfolios for the long run and offer a lot of excellent content for free. I write company review articles on Sure Dividend each Quarter.
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References
https://datacenterfrontier.com/metaverse-platform-roblox-adds-data-center-to-address-73-hour-outage/
https://finance.yahoo.com/quote/IBM/cash-flow?p=IBM
https://finance.yahoo.com/quote/NKE?p=NKE&.tsrc=fin-srch
https://finance.yahoo.com/quote/VOD.L?p=VOD.L&.tsrc=fin-srch
https://investors.vodafone.com/about-us/our-purpose-and-strategy?tab=business
https://techcrunch.com/2022/01/24/not-dead-yet-ibms-revenue-growth-accelerates-in-q4/
https://www.alltopeverything.com/top-10-sportswear-brands/
https://www.dividend.com/how-to-invest/5-dividend-stocks-exposure-to-artificial-intelligence/
https://www.dividend.com/stocks/technology/technology-services/it-services/ibm-ibm-corp/#
https://www.investors.com/news/technology/5g-stocks-5g-wireless-stocks/
https://www.macrotrends.net/stocks/charts/VOD/vodafone-group/free-cash-flow
https://www.qualcomm.com/5g/what-is-5g
https://www.statista.com/statistics/221382/revenue-of-top-30-global-telecommunication-operators/
https://www.wsj.com/market-data/quotes/IBM/financials
https://www.wsj.com/market-data/quotes/NKE/research-ratings
https://www.wsj.com/market-data/quotes/UK/XLON/VOD?mod=quote_search
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Great article buddy! I really like this thinking, because the winners of a new industry are often not even the first movers. Anyone remembers Altavista?
I don’t remember AltaVista so that’s a great point 👌. If the metaverse is going to be huge there will more than likely be more than one winner
I’m long both IBM and Vodafone.and have held them both for a couple of yours Good to hear your thoughts on their futures as both companies can sorely test an investors patience!