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3 Giant Tech Stocks That Initiated Dividends This Year
As celebrated as some of the more famous tech stocks are, they're almost never renowned for paying dividends. After all, their industry is also famous for being full of companies energetically investing much of their capital into the latest whiz-bang product or social media site.
Yet there are some tech stocks that have become wealthy and secure enough to start returning capital to shareholders. Three companies that initiated dividends in 2024 are among the cream of the crop in the sector -- Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG), Meta Platforms (NASDAQ: META), and Salesforce (NYSE: CRM).
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Let's do a quick drive-by on each of these three dividend newcomers.
1. Alphabet
Google parent Alphabet folded the announcement of its inaugural dividend into the company's first-quarter results, which were published in late April. The sprawling tech titan declared a $0.20-per-share quarterly distribution to shareholders of all three classes of its stock, and that historic payout was dispensed in mid-June.
This didn't immediately place Alphabet at the top of anyone's list of income stocks, however, and it's still not making the cut -- $0.20 per share works out to a dividend yield of 0.4% on both of Alphabet's publicly traded classes of stock (A and C).
But it's safe to say that very few are buying Alphabet for the few coins it's putting in their pockets. It's a monster of a company in the tech world, with the strongest anchor possible in its near-unassailable internet search business.
Search continues to draw torrents of revenue, and it's still quite the growth segment after all these years. Although Alphabet is always tweaking its search engine, this business is relatively low maintenance and low cost, and this shakes out in very robust profitability.
Meanwhile, the company keeps itself busy with numerous moonshots, and these days its Waymo autonomous car unit is looking like quite a promising service for the coming decades. However the future of the tech landscape shapes up, we can be sure Alphabet will be one of its shapers. That makes any of its stocks a compelling buy; who cares about a low dividend yield in this case?
2. Meta Platforms
Social media star Meta Platforms announced its own dividend initiation as February kicked off. As with Alphabet, Meta broke the news in an earnings release, specifically its fourth-quarter and full-year 2023 results. The company declared a $0.50-per-share quarterly payout on its common stock; since then, it's followed with three more distributions of the same amount.
Like Alphabet, Meta dominates its field. It not only manages the ever-popular Facebook, it also holds the Instagram photo-sharing site and the WhatsApp encrypted messaging app in its portfolio. For regular smartphone or computer users -- which includes most of us these days -- the company's properties are near-essential tools if we want to keep in touch with friends or disseminate certain types of content.
This kind of power and reach is irresistible to advertisers eager to place sharply targeted ads on Facebook. As a result, Meta's fundamentals just keep swelling -- in its most recently reported quarter, revenue surged 22% higher year over year (to more than $39 billion), while headline net income ballooned by 73% to nearly $13.5 billion. That shakes out to a sky-high 34% net margin; this kind of performance is typical for the company.
Meta as a business and stock is roughly akin to Alphabet in several respects. It's got similar levels of power and prominence, but distributes a comparably low-paying dividend. In fact, that $0.50 per share, per quarter yields even less than Alphabet's, at a barely there 0.3%. Again, though, investors like the stock for that ever-humming growth engine, not the scraps of cash it's handing out.
3. Salesforce
Rounding out this trio of top tech dividend launchers is Salesforce, which declared its first-ever shareholder distribution at the end of February. The quarterly payout is, and remains as of December, $0.40 per share.
Customer relationship management (CRM) is still providing growth for Salesforce, although both that segment and the company itself have matured over the years. Management has made some splashy asset buys over the years to complement its core; business communications app Slack is one of the more familiar ones, at least to folks who work in offices.
Those add-ons are maturing too, though. Revenue from Slack grew by 8% year over year in the company's most recently reported quarter. This sounds promising, but in each of the two previous frames, that figure was far higher, at 17%.
So Salesforce might be headed toward a future of relatively modest growth. The company has high hopes for its Agentforce, an artificial intelligence (AI)-powered chatbot product. It's still comparatively early days for AI, however, and it remains to be seen how much of a hit this will be. In the meantime, we can count on Salesforce to keep an eye on potential acquisitions, as it has proven adept at powering some of its growth with such purchases.
Salesforce's recently introduced dividend is about as generous as Alphabet's and Meta's, which is to say, not very much (it's 0.4%). Since few are likely buying this stock for that payout, I'd say compared to the other two titles, this one is a less compelling purchase, although the company's future still looks bright.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Salesforce. The Motley Fool has a disclosure policy.
