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DailyBubble News

Google Parent Company Alphabet Just Proved Why Dividends Matter, Even for Growth Stocks

Alphabet’s value has nearly doubled in the last 16 months, making it a strong investment option. Following Meta Platforms’ announcement of its first dividend payout, Alphabet has also joined the ranks of companies rewarding shareholders with a quarterly dividend. At a starting rate of $0.20 per share, Alphabet plans to sustain this payout in the future.

Despite a modest 0.5% forward yield, Alphabet’s commitment to dividends aligns it with other major tech companies like Microsoft, Apple, and Meta. These companies collectively pay out over $50 billion annually to shareholders through dividends and stock buybacks. Stock buybacks, in particular, can benefit shareholders in the long run by increasing earnings per share and reducing dividend liabilities.

Alphabet’s focus on capital return yield, rather than just dividend yield, reflects its strategic use of capital. By authorizing a $70 billion buyback program, in addition to expected dividends, Alphabet aims to provide a total capital return yield of 3.4%. This approach illustrates the company’s dedication to returning value to its shareholders.

With its strong financial position and diverse revenue streams, Alphabet remains an attractive investment option even after its recent rally. Trading at a price-to-earnings ratio of 25.5, Alphabet’s future earnings growth and buyback initiatives could position it favorably against the broader market index.

Overall, Alphabet’s decision to pay dividends, along with other tech giants, signals a new era for big tech companies. Despite trading near its all-time high, Alphabet’s continued growth potential makes it a compelling investment choice for investors.

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