Alphabet Declares First Dividend and $70 Billion Buyback Program

Alphabet, the parent company of Google, made a significant announcement on Thursday, revealing plans for its first-ever dividend payout of 20 cents per share, along with authorization for a massive stock buyback program of up to $70 billion. This move mirrors Meta’s decision earlier in February to initiate its inaugural dividend.

As of March 31, 2024, Alphabet boasted an impressive $108 billion in cash and marketable securities. The market responded positively to this news, with shares soaring by 15% in after-hours trading, bolstered further by better-than-expected first-quarter earnings.

Alphabet Declares First Dividend and $70 Billion Buyback Program

It’s worth noting that Alphabet had previously authorized a repurchase of the same magnitude exactly one year ago, during a period marked by intense cost-cutting measures and layoffs.

The dividend payout is applicable to all classes of shares, including super-voting Class B shares and nonvoting Class C shares, with most Google investors holding Class A shares. Shareholders of record as of June 10 will receive the dividend in the same month.

Among the notable beneficiaries of this dividend are Alphabet’s co-founders, Sergey Brin and Larry Page. Brin, who owns over 730 million Class B and C shares, stands to receive a substantial payout of $146 million, while Page, with 389 million Class B shares, will receive a dividend payment of $78 million.

This move by Alphabet reflects a broader trend in the technology industry, where investors are seeking signs of maturity and financial stability. Beginning in 2022, major tech firms implemented layoffs and tightened spending, actions that were positively received by investors. Similarly, the market has reacted favourably to the initiation of share buybacks and dividends. Meta’s announcement of its inaugural dividend in February led to a significant surge in its share price, increasing by more than 14%.

In contrast, Amazon, another tech giant, has never issued a dividend nor authorized a share buyback on the scale of Google’s. Amazon’s largest share repurchase, in 2022, amounted to up to $10 billion.

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