The move to pay a dividend for the first time was announced in Facebook’s parent company’s Q4 and full-year 2023 results.
Meta’s board of directors declared a cash dividend of $0.50 (39p) per share payable on 26 March 2024 to stockholders holding stock at the close of business on 22 February 2024.
Stock in Meta surged by more than 15% on the news – adding more than £110bn to its valuation. At the time of writing, the share price stands at $477.25, up from $394.78 at close of business yesterday.
The group intends to pay a cash dividend on a quarterly basis going forward, subject to market conditions and approval by its board of directors.
The development is a big turnaround for Meta, which suffered a meltdown in 2022 that wiped out over three quarters of its value.
“We had a good quarter as our community and business continue to grow,” said Mark Zuckerberg, Meta founder and CEO. “We’ve made a lot of progress on our vision for advancing AI and the metaverse.”
The ‘Magnificent Seven’
Experts said this latest development in the world of US mega-cap growth companies will keep them front of investors’ minds, after a strong run that has seen the so-called ‘Magnificent Seven’ (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla) dominate the US and global stock market indices as excitement about AI took hold last year.
Jason Hollands, managing director of Bestinvest by Evelyn Partners, said: “Meta’s announcement was remarkable in several ways. The numbers were astounding, with reported and forecast revenues outgunning expectations, advertising profitability and user numbers surging, and the firm also managing to keep costs under control.
“Profits multiplied to $10.6bn for the quarter ending in December from $300m per year earlier. But it’s the dividend that will raise eyebrows: not only did Meta announce an additional share buyback of $50bn, but nearly 12 years after its landmark 2012 IPO, it announced its first dividend payout to shareholders of 50 cents per share.
“That means it joins Apple, Microsoft and Nvidia among the Magnificent Seven growth stocks in adopting a dividend policy. The promise of a little income as well as the potential for growth will have been a major factor in driving Meta stock up around 15% last night.”
Dan Coatsworth, investment analyst at AJ Bell, said: “Meta has become the fourth member of the Magnificent Seven group of mega-cap tech stocks to pay a dividend. The move is surprising given it has flagged a need to invest heavily in AI-related infrastructure, and its metaverse project is gobbling up cash on a quarterly basis with no sign of it making a profit for years to come.
“Meta has declared an intention to pay dividends every quarter, beginning with a 50 cents per share payment. On an annualised basis, that equates to $2 per share and a 0.4% yield based on a $461 share price. That’s not going to win over a whole new group of investors looking for income opportunities. In fact, it’s the type of yield to which most investors pay little attention.
“So why is it bothering to pay a dividend at all? Companies start paying dividends when they are more grown up, perhaps when they’ve commercialised an idea and are seeing a steady increase in sales and profits. Meta already has a well-established social media network business with a large income stream from advertising, so one could argue the dividend could have been initiated a long time ago.”
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