For investors keen on capitalising on artificial intelligence (AI) shares while also seeking reliable dividend income, two names might be worth a closer look this October.
An intelligent thing to do when scoping out investment themes is to seek out where to position along the value chain downstream from the industry at hand.
For instance, there are the obvious mining stocks in the resources sector. But you've also got machinery suppliers, mining royalties, and those that use the end metals/products. The same can be done with AI shares.
On that note, Macquarie Group Ltd (ASX: MQG) and Origin Energy Ltd (ASX: ORG) each provide unique albeit indirect exposure to the AI theme.
Added to that, you've got fairly reliable dividend income to count on with these names – something largely absent with AI companies directly. Here's why they could be solid picks for your portfolio according to the experts.
AI shares – think downstream
Macquarie Group has earned a reputation for its diversified business model, which has shifted significantly over the past decade.
It has evolved from a traditional investment bank into a global player in asset management, with a strong focus on infrastructure and renewable energy.
This transformation includes a pivot onto the infrastructure end of AI, namely data centres and fibre optic assets.
And boy does AI need the infrastructure to support its growth. Think real estate, processing power, and loads of it.
Recent analysis put the "mega datacentre" market at a value of US$23 billion last year. It is expected to climb nearly 5% per year by 2030.
Energy consumption and the means to provide energy are, therefore, critical factors in the AI trajectory. Here is where Macquarie's bright minds have shone through.
Macquarie's AI plays
The group's acquisition of TPG Telecom Ltd (ASX: TPG)'s fibre network, valued at $5.25 billion, is one such push.
Whilst not a direct AI share itself, Macquarie's move here is a clear step into areas that support increased data usage and AI-driven demand.
This follows the sale of the investment bank's stake in data centre provider AirTrunk, offloaded to Blackstone for a tidy $24 billion.
For all of Macquarie's potential earnings growth, the company can pass these AI-related cash flows to its owners as dividends.
Bell Potter is bullish on the stock for these annuity-style income streams from asset management.
This diversification reduces earnings volatility and supports consistent dividends. In a volatile, AI-driven world, it pays to be boring.
The broker says Macquarie has nearly $11 billion in surplus capital ready to use, that is, to pay dividends or invest in AI and digital infrastructure projects. This could add a layer of income stability for those looking to benefit from AI shares without direct exposure.
Origin, unlikely AI share benefactor
The second form of oxygen for growth in AI-related themes is energy. The more processing power we use, the more energy we need.
According to the Australian Energy Council (AEC), citing data from Morgan Stanley, energy demand from data centres is projected to increase "from 5% of total national electricity generation to 8% by 2030.
"[I]t could even reach as high as 15 per cent", the AEC argues.
The bulk of the growth will consume swaths of power off Australia's energy grid, the Council says:
[Morgan Stanley's] most bullish scenario forecasts that data centres could require 3,777 MW in 2030, a 20% growth rate from 2023. Even its most pessimistic forecast sees an 8% growth in uninterruptible power supply requirements over the 2023-2030 period to 1,762 MW.
Origin Energy is one of Australia's leading energy providers. This makes it another strong contender in the ASX dividend space. And a potential beneficiary of the boom in energy demand.
Goldman Sachs is optimistic about Origin Energy's ability to generate free cash flow (FCF) through its Australian Pacific LNG (APLNG) venture.
According to APLNG, it supplies around 30% of the energy supply to the Australian East Coast's gas market.
The broker notes that approximately 50% of Origin's FY25 estimated pre-tax earnings will come from APLNG, providing a stable foundation for cash flow.
Goldman says this cash flow supports Origin's ability to pay dividends. It forecasts fully franked dividends of 48 cents per share in FY25 and 58 cents per share in FY26.
It has a buy rating on Origin with a price target of $10.45, suggesting some upside potential alongside those dividends.
Foolish takeaway
Both Macquarie Group and Origin Energy are sleep-easy ASX dividend shares AI investors may want to check out. Each company offers opportunities for investors looking to combine AI growth trends with the stability of dividend income, according to experts.
In the last 12 months, Origin is up nearly 7%, whereas Macquarie has climbed 44% into the green.
