In March of this year, Meta Platforms (NASDAQ: META) officially became a dividend-paying stock by making its first $0.50 per share distribution. Two more quarterly payouts have occurred since then, with the most recent taking place on Sept. 26 to those who held shares as of the close of business on Sept. 14.
Although small, Meta Platforms’ dividend signals a pivotal change
Meta distributes dividends four times a year, meaning current payouts equal $2 per share annually for shareholders.
Currently, Meta’s dividend yield, calculated by dividing the annual dividend by the stock price, stands at approximately 0.35%. While this is low compared to many dividend-paying stocks, especially the average yield of around 1.3% for S&P 500 companies, it still marks an important step forward.
Importantly, the existence of a dividend reflects a commitment from Meta’s management to return value to shareholders. It also indicates that the company’s financial situation is strong enough to support these payments without jeopardizing its operations.
Looking ahead, will Meta Platforms boost its dividend in the future? Most likely. In the second quarter, Meta generated $10.9 billion in free cash flow, vastly exceeding the projected $1.27 billion required for upcoming dividends.
Moreover, over the last decade, Meta’s free cash flow has surged by more than 800%. If this growth continues, shareholders may anticipate higher dividend payouts long into the future.
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Before making an investment in Meta Platforms, it’s worth considering the following:
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, serves on The Motley Fool’s board of directors. Jake Lerch holds no position in any of the stocks discussed here. The Motley Fool maintains positions in and recommends Meta Platforms. For more details, please refer to their disclosure policy.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
