Meta
Platforms (META)
has
returned
billions
in
cash
to
its
shareholders
via
share
repurchases.
But
last
week,
along
with
its
fourth-quarter
earnings
release,
the
company
made
the
unexpected
announcement
that
it
was
initiating
a
quarterly
dividend
payment.
Shareholders
of
record
on
February
22
will
be
paid
a
$0.50
per
share
dividend
on
March
26.
Morningstar
stock
analysts
welcomed
this
news,
with
senior
equity
analyst Ali
Mogharabi writing,
“We
also
commend
Meta
for
instituting
a
dividend
alongside
share
buybacks.”
The
combination
of
the
dividend
news
and
the
overall
tenor
of
the
earnings
report
sent
Meta’s
stock
soaring
on
Friday.
Its
shares
rose
20.3%
to
a
new
record
high
of
$474.87.
Meta
to
Stay
Focused
on
Stock
Buybacks
However,
buybacks
will
remain
the
primary
mechanism
by
which
Meta
returns
cash
to
shareholders.
The
firm’s
repurchases
from
2021-23
totaled
$92.3
billion
(£73.2
billion),
and
Morningstar
analysts
note
that
it
“had
$81
billion
authorized
for
additional
repurchases
as
of
the
end
of
2023.”
The
newly
announced
dividend
represents
a
payout
of
approximately
$5.3
billion
for
2024.
During
the
earnings
call,
when
asked
about
the
company’s
thought
process
around
initiating
a
dividend,
CFO
Susan
Li
said
that
“returning
capital
to
shareholders
remains
an
important
priority
for
us,
and
we
believe
introducing
a
dividend
just
serves
as
a
nice
complement
to
the
existing
share
repurchase
program.
The
dividend
doesn’t
change
…
the
way
we
determine
the
total
amount
of
capital
we
return,
and
we
expect
that
share
repurchases
will
continue
to
be
the
primary
way
we
return
capital
to
shareholders.
But
introducing
a
dividend
just
gives
us
a
more
balanced
capital
return
program
and
some
added
flexibility
in
how
we
return
capital
in
the
future.”
How
Much
Will
Meta’s
Dividend
Be?
The
initial
annual
dividend
rate
of
$2
per
share
equates
to
an
11.1%
payout
ratio
and
translates
into
a
forward
yield
of
less
than
0.5%
as
of
the
recent
closing
price.
To
place
that
figure
in
context,
it’s
slightly
less
than
the
yields
of
Meta’s
mega-cap
growth
peers
Apple
and
Microsoft,
which
currently
yield
0.5%
and
0.7%,
respectively.
Meanwhile,
the Morningstar
Dividend
Composite
Index has
a
yield
of
3.17%.
Based
on
Morningstar
equity
analysts’
earnings
forecasts,
that
annual
rate
would
increase
to
$3.18
per
share
by
2028.
Yet
even
if
Meta’s
stock
price
doesn’t
increase
over
the
next
four
years,
its
dividend
yield
would
remain
less
than
1%,
far
below
the
yield
most
income-focused
investors
seek.
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