Investing in Tech Dividends: Alphabet and Meta Platforms
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META) are often associated with online search, social media, and artificial intelligence (AI). These tech giants rarely come to mind for dividend investing, yet both offer dividends. While dividends may not be the primary reason for investing in these shares, they enhance their attractiveness as long-term holds.
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1. Alphabet
Last week, Alphabet’s stock price dropped after Apple announced plans for an AI search feature in its Safari browser. Some investors view this as a threat to Google’s search dominance, a crucial aspect of Alphabet’s revenue. Nevertheless, Alphabet continues to show strong prospects. Historically, various competitors have attempted to challenge Google’s market position.
For instance, Microsoft integrated AI into its Bing search engine, yet it has had little impact on Google’s substantial market share. A core strength of Alphabet is its brand association; Google has become synonymous with online searches. People instinctively use Google for their queries, making it difficult for competitors to alter this habit.
Additionally, Google leverages the network effect. A higher search volume enables Alphabet to gather more data, which improves search accuracy and attracts even more users. Alphabet has also enhanced its search results with AI features.
Alphabet should maintain its leadership in the digital advertising space. The company has several growth strategies in play. Notably, its cloud computing efforts, propelled by AI advancements, and its YouTube platform are proving fruitful. By the end of 2024, Alphabet expects to achieve a combined revenue run rate of $110 billion from YouTube and Google Cloud. For context, Alphabet reported a total revenue of $350 billion last year.
Switching costs and the network effect in its cloud and streaming services further strengthen Alphabet’s market position. The company has a robust financial performance, long-term growth potential, and competitive advantages, all characteristics of successful companies. In 2024, Alphabet introduced a dividend of $0.21 per share, equating to a yield of approximately 0.5% at its current stock price.
2. Meta Platforms
Despite increased competition in social media, Meta Platforms remains the clear leader based on user numbers. The company boasts 3.43 billion daily active users across platforms like Instagram, Facebook, Messenger, and WhatsApp, primarily generating revenue from advertising.
Recent initiatives have further boosted engagement, particularly through AI-driven algorithms. Meta also benefits from the network effect; platforms like Instagram enhance connectivity among users, making them increasingly valuable. This engagement trend suggests that Meta is well-positioned to maintain a strong advertising revenue stream.
Meta is exploring additional growth opportunities, particularly in AI. While the company has yet to begin monetizing its large language model, Llama, future efforts seem promising given its substantial investments in AI technologies. The ambitious metaverse initiatives could also yield future returns.
Importantly, Meta can develop various monetization strategies to capitalize on its active user base, reinforcing its position as a long-term investment. The company recently initiated a dividend program, distributing $0.53 per share quarterly, translating to a yield of around 0.3% based on the current share price. Investors aiming for growth might consider reinvesting dividends to maximize returns.
Should you invest $1,000 in Alphabet right now?
Before acquiring stock in Alphabet, it’s essential to note specific insights:
The Motley Fool Stock Advisor analyst team recently highlighted what they consider to be the 10 best stocks to buy now—With Alphabet not making the list. The selected stocks have the potential for significant returns in coming years.
Consider when Netflix was recommended on December 17, 2004… if you invested $1,000 at that time, you’d have $613,951*! Or when Nvidia was on the list on April 15, 2005… an investment of $1,000 would have grown to $796,353!
The total average return from Stock Advisor currently stands at 948%, vastly outperforming the S&P 500’s 170% return.
* Returns as of May 12, 2025.
Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board of directors. Randi Zuckerberg, a former director at Facebook and sister of CEO Mark Zuckerberg, is also a board member. Prosper Junior Bakiny holds positions in Meta Platforms. The Motley Fool has holdings in and recommends Alphabet, Apple, Meta Platforms, and Microsoft. Additionally, it recommends long January 2026 $395 calls and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views expressed are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
