On Thursday, Alphabet Inc., the parent company of Google, announced that it will begin paying dividends to all shareholders at a rate of 20 cents per share. This decision is a central component of the company’s financial strategy, which also includes a substantial $70 billion stock repurchase program instead of pursuing new investments.
Following the release of its first-quarter earnings, which exceeded expectations, Google experienced a 15% increase in its share price. The announcement regarding dividends and the stock repurchase program came immediately after Alphabet’s financial results were made public.
Alphabet Inc. is now set to follow Meta’s path regarding the history of shaped dividend declaration, which took place in February.
“Our results in the first quarter reflect strong performance from Search, YouTube and Cloud. We are well under way with our Gemini era and there’s great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation,” Alphabet Inc and Google’s CEO Sundar Pichai stated.
Alphabet Inc. has a strong financial position, boasting $108 billion in cash and marketable securities as of the end of March 2024
Alphabet’s strong financial position, boasting $108 billion in cash and marketable securities as of the end of March 2024, provides a solid basis for these shareholder-friendly moves. The timing of this announcement is particularly significant, coinciding with the first anniversary of Alphabet’s previous identically-sized stock repurchase authorization.
Alphabet’s dividend will be distributed among all classes of shares, ensuring that both super-voting Class B shareholders and non-voting Class C shareholders are included. It’s worth noting that the majority of Google investors hold Class A shares. The dividend is scheduled to be paid to all shareholders on record as of June 10, with distribution taking place within the same month.
Sergey Brin, who holds over 730 million Class B and C shares, is poised to receive an impressive $146 million payout. Larry Page, with 389 million Class B shares, will receive a dividend payment totaling $78 million.
The tech industry has been under scrutiny, with investors looking for signs of maturity and stability. Since 2022, major tech firms have implemented layoffs and tightened their financial belts. These austerity measures have been well-received by investors, who have also reacted positively to the introduction of share buybacks and dividends. Meta’s dividend announcement earlier this year led to a more than 14% increase in its shares. Amazon stands out for not having issued a dividend or authorized a share buyback on the scale of Google’s. Amazon’s largest buyback to date was a $10 billion authorization in 2022. The e-commerce giant is expected to report its first-quarter earnings on the upcoming Tuesday.