Alphabet and Meta Platforms Pay Dividends. Is Either of Them Worth Owning for Income?
Both of these internet heavyweights announced quarterly dividends in the first half of 2024.
Alphabet and Meta Platforms began paying dividends in 2024, introducing a new long-term income strategy for shareholders. Despite their history of strong performance and robust finances, investors should consider several factors before investing in these companies for income. Both Alphabet and Meta Platforms have modest dividend yields of 0.31% and 0.33%, respectively, which are significantly lower than the inflation rate.
There are better investment options available, such as the Vanguard S&P 500 ETF, which offers a higher dividend yield of 1.07%. Additionally, these companies are directing significant capital towards artificial intelligence (AI) initiatives, which may divert resources away from dividend payouts. Free cash flow has also turned negative, raising concerns about potential returns on their AI investments.
While Alphabet and Meta Platforms trade at attractive valuations, investors must be cautious and explore other income-generating opportunities in the market.
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