What Amount Does Alphabet Anticipate Distributing as Dividends in 2025?
What Amount Does Alphabet Anticipate Distributing as Dividends in 2025?
Recently, Google's parent company, Alphabet (0.21% for GOOG, 0.24% for GOOGL), joined other tech giants like Apple, Facebook (now Meta Platforms), and Microsoft, in offering dividends to its shareholders. This move could be an attempt to ease investor worries about how generative artificial intelligence might affect Alphabet's flagship service, Google Search, which dominates the market with an estimated 90% share of Internet searches.
Let's delve into Alphabet's dividend, its growth potential, and how it rewards its shareholders.
Alphabet's Dividend Details
In August, Alphabet introduced its first-ever quarterly dividend of $0.20 per share, amounting to $0.80 per share annually, with a yield of 0.47%. Investors often look for a company's ability to sustain such payouts without draining its cash reserves. With a net cash of $82.4 billion, Alphabet seems well-equipped to handle its projected annual dividend payments of around $10 billion.
An important figure to consider for dividend-issuing stocks is the payout ratio. Alphabet's payout ratio is a modest 5.2%, which is significantly lower than other tech giants, like Apple, Meta Platforms, and Microsoft.
Given Alphabet's robust financial health and low payout ratio, investors are optimistic about potential dividend hikes in the future. However, management has yet to indicate the extent of these upcoming increases.
Additional Perks for Shareholders
Besides its dividend, Alphabet is also actively buying back its own shares. This practice returns capital to shareholders by increasing their stake in the company. Over the past five years, Alphabet's management has reduced the company's outstanding shares by 11%. Most recently, they've set a $70 billion share repurchase program. In the last quarter alone, Alphabet invested $15.3 billion in share buybacks, bringing the total to $46.7 billion in buybacks for the first three quarters of 2024.
Alphabet's decision to distribute dividends and buy back shares demonstrates its commitment to financially rewarding its investors. By offering a quarterly dividend of $0.20 per share and investing heavily in share buybacks, Alphabet is providing investors with both income and potential growth opportunities through share price appreciation.
As Alphabet continues to generate substantial cash flows, its ability to sustain its dividend payments and expand its buyback program could make it an attractive option for investors seeking income and capital appreciation in the world of tech finance and investing.