Google parent company Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG) surprised investors earlier in 2024 by announcing its first-ever dividend along with its first-quarter earnings report.
Management announced a $0.20 dividend, payable to shareholders of record as of June 10, and with the actual dividend payment occurring on June 17. A few months later, Alphabet announced another quarterly dividend, also of $0.20 per share, payable in mid-September.
So far, these are the only two dividends Alphabet has declared. However, it would be a surprise if it didn't declare another quarterly dividend to be paid in December when it releases its next financial report. Assuming the dividend rate stays the same in the next quarter, Alphabet will have paid $0.60 per share in dividends in 2024.
There are 12.48 billion shares of Alphabet stock outstanding, which implies that the company will pay a total of $7.5 billion in dividends this year.
Will Alphabet's dividend grow?
To be sure, Alphabet just started paying dividends, and we have no idea exactly what the company has planned for the future. However, Alphabet has well over $100 billion in cash on its balance sheet, the current dividend represents a low 0.5% dividend yield, and management has made it clear that it is prioritizing the return of capital to investors.
For the time being, stock buybacks (repurchases) seem to be the main mechanism of doing this. At the same time as it announced its first-ever dividend, Alphabet's management also announced a new $70 billion repurchase authorization, which far exceeds its annualized dividend rate.
However, with steadily growing cash flows, and increasingly limited opportunities to use its money to reinvest directly into its business, it wouldn't be a surprise to see Alphabet's dividend grow in the coming years.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
