On Thursday, Alphabet Inc., the company behind Google, poured the news that it will start paying out dividends to all share holders for 20 cents per share.
This is the key element of the company’s financial agenda which includes a whopping $70 billion stock repurchase program instead of making new investments. Google saw its shares jump up 15% after its earnings for the first quarter came out and, as it turned out, surpassed the company’s expectations. The news came straight after the release of Alphabet’s financial results.
‘Our results in the first quarter reflect strong performance’: Pichai
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.
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Alphabet’s robust financial position, with $108 billion in cash and marketable securities as of the end of March 2024, provides a solid foundation for such shareholder-friendly actions.
The timing of this announcement is particularly noteworthy as it coincides with the one-year anniversary of Alphabet’s previous identically-sized stock repurchase authorization.
Alphabet’s dividend will be distributed across all classes of shares, ensuring that super-voting Class B shareholders and nonvoting Class C shareholders are included.
Notably, 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 the distribution occurring within the same month.
The implications of this dividend are substantial for Alphabet’s co-founders
Sergey Brin, holding over 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 receive a dividend payment amounting to $78 million.
The tech industry has been under scrutiny, with investors seeking signs of maturity and stability. Since 2022, major tech firms have initiated layoffs and tightened their belts financially. These austerity measures have been well-received by investors, who have also reacted positively to the initiation of share buybacks and dividends.
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Meta’s dividend announcement earlier this year propelled its shares to a more than 14% increase.
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.
