On Thursday, Alphabet Inc., the company behind Google, spilled the beans that it will begin paying a dividend of 20 cents per share to all shareholders.
It's a key part of the company's financial agenda, which includes a $70 billion share buyback plan instead of making new investments. After its first-quarter earnings came out, Google saw its shares rise 15%. The news came directly after Alphabet's financial results were released.
Our results in the first quarter reflect strong performance: alms
Alphabet Inc is now set to follow Meta's path in history with a format dividend announcement in February.
“Our results in the first quarter reflect the strong performance of Search, YouTube and Cloud. We are well into our Gemini era and there is great momentum throughout the company. Our leadership in AI research and infrastructure and our global product footprint position us well for the next wave of AI innovation,” said Sundar Pichai, CEO of Alphabet Inc and Google.
Read more Alphabet Q1 Results: Google parent company's revenue is $67.6 billion
Alphabet's strong financial position, with $108 billion in cash and marketable securities at the end of March 2024, provides a solid foundation for such shareholder-friendly moves.
The timing of this announcement is particularly noteworthy because it coincides with the one-year anniversary of Alphabet's previous one-size-fits-all share repurchase authorization.
Alphabet's dividends will be distributed among all classes of shares, ensuring that super voting Class B shareholders and non-voting Class C shareholders are included.
Notably, most Google investors own Class A shares.
The dividend is scheduled to be paid to all shareholders from June 10, and the distribution will occur in the same month.
The implications of this dividend are substantial for Alphabet's co-founders
Sergey Brin, who owns more than 730 million Class B and C shares, is set to receive a staggering $146 million payout.
Larry Page, with 389 million Class B shares, will pay a $78 million dividend.
The technology sector is under scrutiny as investors look for signs of maturity and stability. Starting in 2022, big tech companies are starting layoffs and tightening their belts financially. These austerity measures have been well received by investors, who have responded positively to the launch of share buybacks and dividends.
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Meta's dividend announcement earlier this year sent its shares up more than 14%.
Amazon doesn't pay a dividend or authorize a stock buyback on Google's scale. A $10 billion endorsement in 2022 is Amazon's biggest buyback yet.
The e-commerce giant is expected to report its first-quarter earnings on Tuesday.
