Does Meta Pay Dividends in 2024? Looking Into META First-Ever Payout

Does Meta Pay Dividends?

Yes, Meta Platforms (META) pays dividends. On February 1, 2024, Meta joined Microsoft (MSFT), Apple (AAPL), and Nvidia (NVDA) as the fourth of seven high-performance tech stocks, also known as ‘The Magnificent Seven,’ that make regular payouts. 

The parent company of the world’s largest social media platform, Facebook, initiated its quarterly cash dividend of $0.50 per share, with the first payment made on March 26. It marks Meta’s inaugural dividend since its initial public offering on May 18, 2012.

For more than a decade, Meta preferred share repurchase to reward investors, but now it adds dividends to its capital program. Will Meta continue to pay dividends? Will they increase their dividends in the future?

We explore all aspects of the Meta stock dividend.

At the time of writing, Meta’s shares were trading at $464.63 per share, giving it a market capitalization of about $1.178 trillion.

Table of Contents Table of Contents

1. Does Meta Pay Dividends?
2. Key Takeaways
3. How Often Does Meta Pay a Dividend?
4. Why Meta’s Dividend Is Low?
5. Meta's Dividend History
6. Meta’s Dividend Growth
7. 5 Tech Stocks That Pay Better Dividends Than Meta
8. What Are Dividends?
9. The Bottom Line
10. FAQs
11. References

Show Full Guide

Table of Contents

1. Does Meta Pay Dividends?
2. Key Takeaways
3. How Often Does Meta Pay a Dividend?
Show Full Guide
4. Why Meta’s Dividend Is Low?
5. Meta's Dividend History
6. Meta’s Dividend Growth
7. 5 Tech Stocks That Pay Better Dividends Than Meta
8. What Are Dividends?
9. The Bottom Line
10. FAQs
11. References

How Often Does Meta Pay a Dividend?

Generally, companies pay dividends to investors quarterly. Some companies pay dividends annually or semi-annually. For example, the multinational software company SAP pays dividends once a year.

What about META dividends? After initiating a dividend in the final quarter of the 2023 financial year, the obvious question would be: when does Meta pay dividends, and how often?

The company has stated its intention to pay dividends every quarter, subject to market conditions and board approval.

So far, the next META dividend pay date has not yet been announced.

Why Meta’s Dividend Is Low?

In terms of value, Meta’s inaugural dividend isn’t particularly thrilling. The company pays a quarterly dividend of $0.50 per share, translating into a yield of 0.11%.

Among the Magnificent Seven stocks, META’s dividend was the second highest after Microsoft, which declared a dividend of $0.75 per share in March 2024, with payment due on June 13, 2024, according to Nasdaq’s data. However, it still surpasses the dividends paid by Apple and Nvidia.

Apple’s latest dividend paid on May 16 was $0.25/share, and Nvidia paid $0.02 per share on March 27. Alphabet (GOOG) will make a cash payment of $0.20 per share for its first dividend on June 17, 2024.

Despite initiating dividends, Meta’s Chief Financial Officer, Susan Li, stated that share repurchase remains the company’s primary method of returning capital to shareholders. This could explain why Meta opted for a low dividend.

On an annual basis, Meta’s dividend per share of $2 would result in a total dividend payment of $5 billion for this year, compared to the $50 billion that the company has authorized for its share repurchase program.

Li said during the Q4 2023 earnings call on February 1.

“Introducing a dividend just gives us a more balanced capital return program and some added flexibility in how we return capital in the future.”

Additionally, META also focuses on using its huge free cash flow to invest in opportunities in its core business, such as artificial intelligence (AI) and Reality Labs, to bolster its performance. Meta accumulated $43 billion of free cash flow (FCF) in 2023, up from $18 billion in 2022, according to Meta’s 2023 annual report.

“We generally believe that our strong financial position is going to enable us to support both of those initiatives while continuing to return capital to shareholders,” Li said in a Q1 2024 earnings call on April 24.

Furthermore, when companies first pay dividends, they usually start small before growing it over the years. Apple paid $0.06 per share when it started a dividend in 1987, and Microsoft paid $0.08 per share for its dividend debut in 2023.

Meta’s Dividend History

Meta dividend history is not available at the moment because it has only made its first-ever payment.

As for the share repurchase program, which started in January 2017 and has no expiration date, in 2023, the company repurchased 92 million shares of our Class A common stock for an aggregate amount of $20.03 billion. As of December 31, 2023, $30.93 billion remained available and authorized for repurchases.

In January 2024, an additional $50 billion of repurchases was authorized under this program.

Meta’s Dividend Yield

The dividend yield, expressed as a percentage, is a financial ratio that indicates how much a company allocates in dividends per share annually compared to its current stock price. This metric is crucial for income-seeking investors, as it shows the potential return based solely on dividend payments.

Meta’s dividend yield currently stands at 0.11%, which is considered low compared to other major dividend-paying tech firms and the US market average.

In comparison, Apple and Microsoft have dividend yields of 0.52% and 0.71%, respectively, as of May 22, according to Nasdaq’s data.

Semiconductor maker Broadcom and IBM Corporation are among the tech companies with high dividend yields of 1.53% and 3.93%, respectively, according to Nasdaq’s data.

According to WallStreetZen, the yield of Meta’s stock dividend is lower than the US industry average of 5.94% and the US market average of 3.55%.

As Meta has only recently started paying dividends, it may be difficult to assess its dividend yield’s performance. It will be necessary to determine whether Meta can consistently pay out dividends.

Meta’s Dividend Payout

A dividend payout ratio (DPR) or simply pay-out ratio shows the proportion of earnings a company uses to pay shareholders in dividends. The remaining earnings are used for other purposes, including reinvesting in its core business or paying off debt.

At the time of writing, Meta’s dividend payout ratio was 2.8%, according to WallStreetZen. It means Meta uses 2.8% of its earnings to pay dividends for shareholders. This is considerably less than other tech stocks.

For instance, IBM spends 74% of its $8.2 billion earnings to shareholders as dividends and retains only 26%. Microsoft allocates 24.7% of its earnings for dividends.

A company with a higher dividend payout ratio tends to allocate a greater portion of its earnings to shareholders rather than reinvesting in the business.

Conversely, a lower dividend payout ratio means that a company spends more of its earnings on reinvestment in the business. Therefore, the company may not pay high or frequent dividends.

Meta has stated that it will continue to increase investment to support its artificial intelligence research and Reality Labs, the company’s business that develops augmented reality (AR) and virtual reality (VR) hardware and software.

The company plans to allocate between $35 and $40 billion in capital expenditures for the full year 2024, up from its prior range of $30 to $37 billion.

Meta’s CFO Susan Li said during a Q1 earnings call on April 24:

“While we are not providing guidance for years beyond 2024, we expect capex will continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts.”

Meta’s Dividend Growth

Meta dividend growth could not be assessed yet as the company has only begun to pay shareholders dividends.

Will Meta Ever Increase Its Dividend?

Although dividends are unlikely to become Meta’s priority, Meta’s solid financial performance over the years suggests potential future growth and sustainability in dividend payments.

Over the years, Meta has managed to maintain revenue growth despite facing issues such as the impact of its social media platforms on teen users’ mental health and concerns about election disinformation due to its massive user base.

With more than 3.2 billion active users across its social media apps — primarily Facebook, Instagram, and others — Meta offers the largest audience and is valuable for social network online advertising, Michael Hodel, director at investment research and financial service Morningstar, wrote in a note on April 25.

Morningstar forecasts a solid ad revenue growth of 17% in 2024, followed by 14% growth in 2025, assuming economic expansion continues and further increases in Reels monetization.

It also expects Meta’s monthly active users to grow about 2% annually over the next five years, owing to growth in Asia and the “rest of the world” geographies.

Hodel said:

“Given its ability to profitably monetize its network via advertising, we think Meta will more likely than not generate excess returns on capital over the next 20 years.”

Morningstar equity analysts’ earnings forecasts that the annual Meta dividend rate would increase to $3.18 per share by 2028.

However, the firm said even if Meta’s stock price doesn’t increase over the next four years, its dividend yield would remain less than 1%, far below the yield most income-focused investors seek.

5 Tech Stocks That Pay Better Dividends Than Meta

Meta stock dividend is still low compared to its peer tech stocks. However, it’s worth noting that other tech stocks may have been paying dividends longer than Meta.

Below are five tech stocks with better payouts than Meta’s dividends in the US.

What Are Dividends?

A dividend is a portion of a company’s net profit paid to the shareholders as compensation or reward for holding on the company’s shares. It is paid on a per-share basis and shareholders receive dividends based on the number of shares that they own.

A dividend is mostly paid every quarter, but companies can also adjust the frequency to semi-annually or annually depending on multiple factors and subject to shareholders’ approval.

There are various types of dividends, including cash, property, stock, liquidating, and scrip dividends.

Why Are They Important to Investors?

While dividends are mostly seen as a way of generating a steady stream of income, they hold many other important functions.

Investors looking to generate additional income, retirement homes, or emergency cash may invest in dividend stocks, providing that the stocks consistently pay regular dividends.

Owning dividend-paying stocks has tax advantages. In some countries, income from dividends is exempt from taxes, such as in Hong Kong. In the U.S., dividends classified as qualified dividends can get a lower tax rate if they meet certain requirements, while ordinary dividends are taxed as ordinary income, just like income from work or interests, according to the US Internal Revenue Service (IRS).

Apart from generating income, a dividend is one of the factors that can help investors gauge a company’s health. A company that initiates a dividend could signal its prospects and ability to generate returns for shareholders.

An increase in dividend distribution could signal that a company is performing successfully and achieving strong profits. On the other hand, it could also suggest that the company is sitting on a large amount of cash but has yet to find new business opportunities to invest in and generate higher returns for investors.

When a business declares that it will cut or will no longer pay its dividend after paying one regularly for years, it may not be doing well. This can also indicate that the business wants to use the dividend money for other initiatives that might yield bigger profits for investors.

The Bottom Line

Meta has initiated a dividend this year to enable flexibility in returning capital to investors. Its dividend per share, at $0.50 quarterly or $2 on an annual basis, is low compared to its peer tech stocks, but it indicates that it still has room to grow, as it only uses 2.8% of its total earnings to shareholders via dividend.

While it began paying dividends, share repurchase will remain its primary way to reward its shareholders.

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