Meta
Platforms (META) made
headlines
in
early
February
with
the
unexpected
announcement
that
it
was initiating
a
regular
quarterly
dividend.
Now
Alphabet (GOOG/GOOGL),
in
conjunction
with
its
first-quarter
earnings
release
on
April
25, said
it
is
initiating
a
quarterly
dividend for
all
its
share
classes.
Shareholders
on
record
as
of
June
10
will
be
paid
a
dividend
of
$0.20
per
share
on
June
17.
•
Fair
Value
Estimate:
$179.00
•
Morningstar
Rating:
3
stars
•
Morningstar Economic
Moat
Rating:
Wide
•
Fair
Value
Uncertainty:
High
What
Will
Be
the
Alphabet
Dividend
Yield?
To
quote
baseball
great
Yogi
Berra,
it’s
déjà
vu
all
over
again.
As
with
Meta,
a
mega-cap
growth
firm
that
has
returned
cash
to
shareholders
via
share
repurchases
will
now
return
cash
via
a
regular
dividend
as
well.
But
the
initial
yield
will
be
modest.
At
current
share
prices,
Alphabet
shares
will
yield
approximately
0.5%,
in
line
with
Meta’s
current
yield.
This
is
far
less
than
Alphabet’s
buyback
yield,
which
has
averaged
2.4%
a
year
over
the
past
five
years.
The
new
annual
dividend
rate
of
$0.80
will
total
around
$10
billion
annually,
while
Alphabet
also
authorised
$70
billion
of
share
repurchases.
It
thus
seems
likely
that
repurchases
will
outweigh
dividends
in
the
near
term.
However,
based
on
Morningstar
equity
analysts’
earnings
forecast
for
the
full
year,
the
new
dividend
rate
represents
just
12%
of
earnings
per
share.
Alphabet’s
management
would
have
substantial
room
for
future
dividend
increases
if
it
allocates
additional
capital
to
the
dividend.
With
Alphabet’s
move,
eight
of
the
10
largest
US
companies
by
market
capitalisation
now
pay
a
quarterly
dividend.
The
best-yielding
stock
in
this
group
is
Broadcom (AVGO),
which
yields
1.6%.
Meanwhile,
Nvidia’s (NVDA) dividend
remains
minuscule,
yielding
just
0.02%. Amazon.com (AMZN) and
Berkshire
Hathaway (BRK.B) are
the
cohort’s
only
non-dividend-paying
stocks.
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