Meta CEO Mark Zuckerberg has announced that the company will issue its first-ever dividend, a move that is expected to make shareholders rich. This surprising announcement comes just days after Zuckerberg apologized at the Senate online child safety hearing. Meta, the parent company of Instagram, Facebook, and WhatsApp, has attributed its 2023 business growth to various initiatives such as completing data center projects, laying off employees, and advancing AI and the metaverse.
According to a press release from Meta, the company’s board of directors has declared a cash dividend of $0.50 per share of Class A and Class B common stock. Shareholders who own stocks as of February 22, 2024, can expect to receive their first dividend payment on March 26, 2024. Subsequent dividends will be distributed quarterly, subject to market conditions and board approval. This dividend payout will have the greatest impact on top shareholders, including institutional investors like the Vanguard Group and BlackRock, as well as individuals like Meta’s chief technical officer Michael Schroepfer and chief revenue officer David Fischer. Zuckerberg himself, who owns approximately $350 million in Meta shares, expects to make an additional $175 million from this dividend.
The decision to issue dividends is significant for Meta and its shareholders. Elizabeth Ayoola, an investing spokesperson at NerdWallet, explains that dividends provide passive and consistent income for stockholders. While Meta’s dividend may not be the highest in the industry, there is potential for growth. If the company continues to grow at its current pace, shareholders could see increased dividend payments in the future.
Kristy Chen, author of “Quit Like a Millionaire” and a leading voice in the financial independence retire early (F.I.R.E.) movement, notes that it is unusual for a tech company to distribute dividends. Tech companies typically prefer to reinvest their profits and expand their share prices. However, Meta’s decision to distribute dividends is expected to benefit both individual stockholders and index investors of the S&P 500.
John Pham, founder of The Money Ninja and a Meta shareholder since the company’s IPO in 2012, sees this move as a positive development. He believes that other cash-rich tech companies may feel pressured to follow suit to attract investment dollars.
The announcement of Meta’s dividend has already had a significant impact on the market, with shares rising by 20%. Fazal Yameen, a former Stash fintech executive, suggests that while this move is well-received by investors, those looking to buy Meta shares now may not benefit from the short-term gains due to the already inflated stock price. However, Yameen believes that Meta’s dividend signals a shift in the company’s approach and shows that it is growing up. He hopes to see Meta increase its dividend rate in the future.
This move by Meta could have a ripple effect on other tech companies, particularly those involved in AI. Fazal Yameen suggests that Meta’s dividend signals to the market that tech companies can generate significant revenue and still distribute it to their investors. This could challenge other tech companies to follow suit and potentially lead to greater advancements in AI technology.
Overall, 2024 is shaping up to be an interesting year for equity markets, according to industry experts. Meta’s decision to issue dividends not only benefits its shareholders but also sets a precedent for other tech companies. As the world of AI continues to evolve, this move by Meta could pave the way for greater potential and transformation in the industry.
