Meta Platforms (META) Announces A Dividend, Who Will Follow?

By The Insider

@BantingInc

/ 9:49 pm
February 2, 2024

Value Gets Delivered

Meta Platforms (META) took markets for a ride when the company announced a $0.50 quarterly dividend along with a $50 billion share buyback program. Although the company still needs to deliver on its virtual reality (VR) objectives, this is definitely the earnings report that markets were awaiting.

META beat both earnings and revenue by 7.23% and 2.4% respectively as the company’s layoffs proved fruitful to raise profit margins. The announced share buyback program is also a great tool to return some value to shareholders but the real gains were made in the dividend announcement.

The quarterly dividend has pushed META into the same group as AAPL and MSFT among FAANG+ stocks that pay a dividend. The news was so surprising that META surged after hours late yesterday and again throughout today’s trading to post a 20%+ gain. META’s market capitalization now sits at $1.22 trillion on the back of one of the largest 1 day value increases among companies with a valuation of $1 trillion or more.

Who Will Follow?

Following the META dividend announcement, one must expect other big tech companies to follow suit, or at least 1 other big tech company. Seeing how AMZN and NFLX have thin margins and operate in very competitive industries, it only makes sense that GOOGL is the one company that can afford to offer a dividend without breaking a sweat. It’s no secret that GOOGL shares are a favourite of ours as a long time hold, and we certainly bought more following the decline from their earnings. In addition, more shares were purchased following the META dividend announcement.

After seeing the tremendous value that was added to META following the dividend, GOOGL decision makers have to at least be pondering the idea of offering a dividend. In reality it’s not all that strange, as mentioned AAPL and MSFT already pay dividends, GOOGL seems to be the odd duck out at the moment with value for shareholders left on the table. And as far as share buybacks go, GOOGL already has a much larger share buyback program in place than META, and that program will likely continue as it supports the objectives of ‘Class B’ shareholders.