Three tech companies announce new dividends | Wilnesh News
Charlie Gaffney, managing director at Morgan Stanley Investment Management, said that during the recent earnings season, several technology companies either announced dividend starts or raised dividends, providing solid opportunities for income investors. “There’s a potential new wave of activity happening that hasn’t happened in the past as it relates to higher-growth tech,” Gaffney, who is also a portfolio manager at the Eaton Vance Dividend Builder Fund (EIUTX), told CNBC. Domain related.” . “I think this will create a huge opportunity for people who want to use dividends as part of their total returns.” In particular, three tech companies caught the attention of dividend investors when they announced the launch of these payments: Meta Platforms, Salesforce and Booking Holdings. The tech giants “We’re seeing three major, high-profile tech companies just launching,” he said. The next important step for technology companies to start paying dividends is to increase them, rather than maintain them. “That’s another aspect we’re excited about, based on cash flow and fundamentals, they have a good chance of increasing their dividend over time.” Last month, Meta announced it would pay a cash dividend of 50 cents per share, which will be Payment will be made on March 26 to shareholders of record as of February 22. The news came alongside stronger-than-expected quarterly earnings and an announcement that the company would increase its share repurchases by $50 billion. “When you have $60 billion to $70 billion of cash and limited debt on the balance sheet, there’s an opportunity to pay dividends — and they did,” Gaffney said. In fact, Meta reported that as of the end of last year, , the company has $65.4 billion in cash, cash equivalents and marketable securities and full-year 2023 free cash flow of $43 billion. About 85% of analysts rate Meta a Buy or Strong Buy, but they see less than 4% upside from now on, according to data from LSEG (formerly Refinitiv). The stock price is up 37% in 2024, and the dividend yield is 0.4%. Salesforce is the second company named by Gaffney. The business software company reported fiscal fourth-quarter profit in late February. Salesforce’s board of directors declared a cash dividend of 40 cents per share, which will be paid on April 11 to shareholders of record as of March 14. The company also increased its share repurchases by $10 billion. Salesforce reported $10.2 billion in cash generated from operations and $9.5 billion in free cash flow for fiscal 2024. Shares are up 16% so far this year, and the dividend yield is 0.5%. Overall, about 72% of analysts covering Salesforce say it’s a buy or strong buy, while the average price target expects about 5% upside from now, according to data from the London Stock Exchange (LSEG). Finally, Booking Holdings was the third company to catch Gaffney’s attention. At the end of February, the travel company’s board of directors announced a quarterly cash dividend of $8.75 per share, which will be paid on March 28 to shareholders of record as of March 8. The dividend yields 1% on this payment, and the stock is set to gain more than 1% in 2024. According to LSEG, nearly two-thirds of analysts covering the stock think the stock is a Buy or Strong Buy, with the average price target implying 12% upside. Focus on Dividend Originators “Looking for companies that have grown their dividends over time is the backbone of our process,” Gaffney said. “Companies that can consistently grow their dividends at above-average levels have characteristics that outperform the overall market.” Alphabet has been included on Gaffney’s list of potential dividend sponsors, although the tech giant doesn’t currently pay a dividend. “Google is a name we think is similar to Meta in that they have tremendous free cash flow generation and cash on the balance sheet, as well as repurchasing stock – but they haven’t started a dividend yet,” he said. Still, even if tech companies drive the stock market’s gains in 2024, investors should keep an eye on companies that might be ready to start paying dividends. “These are very resilient and durable businesses that have significant staying power due to their size, scale and financial position,” Gaffney said. “Their balance sheets are very strong and reliable and will be able to withstand what we may encounter.” any economic cyclical nature.”
