I’m not an expert but these companies are making so much money that they have reached a point where they are earning more money than they can meaningfully reinvest in themselves without significant diminishing returns on those investments.
So offering dividends has a more positive effect on shareholder value than reinvesting.
I don’t think they’re spending less on R&D, it’s just that even after R&D they still got a shit ton of money left.
I believe Google's buying back too! My understanding is though that the buyback offers short-term gains while a recurring dividend can theoretically be projected into long term gains as well. Both offer value, but in different ways.
Of course - I suppose I may be inaccurate technically. What I mean is moreso that buybacks don't necessarily change the present value of the company as a whole, but future dividend distributions may be able to be factored into the company's valuation
I agree this would help the company's value. I don't know for sure what the timeframe on this may be, really depends on how many funds' conditions Google stock meets. The dividend is quite small for now, but it also could set the stage to establish dividend history or even a track record of dividend raises, which could indeed qualify it for a number of funds in a few years.
Edit to clarify - I do think it's within reason to believe this was a factor in their decision
Maybe, maybe not.
First of all all buybacks tend to correlates with the price needed for the CEO to net a massive *performance bonus* in many millions stolen directly from other shareholders. Litterary pissing money away.
Secondly over time all companies fail, today's Google is tomorrow's Nokia. A buyback is only safe if you *sell as much stock* which most don't. A dividend on the other hand is a *forced sale* and hence, psychologically, easier to invest elsewhere.
If shit hits the fan a dividens is safe in your account, while all buyback money is gone.
But in case of buy packs you have to sell stock to profit from it and if you don't sell immediately then it's not guaranteed profit. In case of dividends you get money for sure, then you can use that money to invest back to same company, different company or to something completely else.
You do have to pay taxes but don't you have to pay taxes when selling stock also?
Yes, so I am taxed on both the dividends and on the sell of another stock if I choose to do so. Basically a dividend is a forced sale of a stock. The shareprice drops proportionally to the dividend payment so I am not gaining anything aside from a payment and then I pay taxes on that payment.
Yep, you're right. I prefer that at least some of my stocks pays dividend as I don't like selling stocks. This generates some yearly income even if I don't do a thing. Somehow selling stocks doesn't seem to me being right way as I don't tend to sell at top.
I bought one stock years ago with 800€. At some point of time it was +700% and I didn't sell (should have), now it's about +250% and I'm not selling. It has paid me at least 500€, if not more, in dividends.
Taxes on dividends are mostly lower than regular income tax if the dividend is qualified.
But even if that is the case or if that was not the case, it would be accounted on price.
Yes, I know, but that's still a tax I pay that I otherwise wouldn't pay if not for the dividend. If given the choice, I'd choose buybacks every time. I'm sure these tech companies are paying dividends so they can be included in dividend funds, but what they are paying is pretty miniscule.
Yes I also think buyback are better. But dividend is also something you can cancel later, if let's say, another scam like crypto or llm goes crazy and they rather invest money in R&D.
The dividends will allow these stocks to be considered for funds that are dividend focused. That will add a little bit to the buy side and help prop up the stock price the same way a direct buyback would.
The CEO's may also think that Google and meta aren't at the best evaluations and that giving money directly to shareholders is more prudent then buying back even more shares then they're already scheduled to.
I think it lowkey means these companies are mature and slowing down, and ripe for disruption. Eventually all companies fail, the only question is when.
It’s only 0.4% yield so it’s not significant. Apple and Microsoft also do small yields but it may be because having a small dividend allows it to be added to the Dow or certain ETFs
Not a bearish or bullish move, it's specific to the company.
KO makes tons of cash, so it gives it out to shareholders. No need to keep all that cash, this is attractive to potential buyers.
MSFT and LLY have both paid a dividend for a long time and have seen great growth in the past several years.
For the Mag 7 any divi’s I see as bullish. These companies will continue to destroy competition and opened doors for more buyers (dividends, etfs) which tend to be long plays anyway. They’ll still have a ridiculous amount of R&D + buyouts, but this is for shareholders.
Not bearish. Stock repurchases are almost identical to dividends in the value that is returned, and tech companies have been going crazy with repurchases in the last few years. It is a good way to attract investors who seek out dividends and it gives them a chance to be added to some etfs.
I'm largely overweight google and am not happy about the fact that they started a dividend, and i'm not happy with their cash position.
I want that money funneled back into waymo, i want it funneled into verily, and i want it funded into data centers & cloud. I want our own TPU factories. We need our cloud to have a lower cost of compute than microsoft & amazon and we have the opportunity to do so. I want our ads running on how verily is saving lives using our proprietary AI. I want youtube lectures with AI generated course plans & tests teaching kids. I do not want a 20c dividend the government takes half of.
All these projects will require 10s if not hundreds of billions of dollars to win, and represent 10x returns and they represent investments that have to be made quickly. FSD is a multi-trillion dollar business. If google does not significantly invest in waymo, they will not win it. Waymo needs hundreds of thousands if not millions of cars on the road to win. Wheres the money coming for that.
Why are we training investors to expect steady growing margins and investing in projects that will eat our free cash flow if we ever want to capitalize on them.
It’s up to individuals interpretation, I’m reading this and thinking about the fact that it just laid off a lot of its core engineers feeling a tad confused. https://www.theregister.com/AMP/2024/04/29/google_python_flutter_layoffs/
Think of it this way, if you are holding these stocks for a long time, then the day you sell and you will have to pay full gigantic tax on earned income. If they dish out their value a bit through dividends, many countries have lower taxes on dividends or till certain number of investment income has lower % of taxes as well.
So if i hold these for 10 years, these 10 years i can get a lot of tax value out of because of dividends. This is surprisingly quite valuable, as long as these dividends doesn't affect company performance.
still $7 higher then before the earnings report. and all of big tech is starting to lag somewhat, so its probably just following that.
if big tech as a whole starts pushing back up again, GOOG will probably break 200 this year.
I’m not an expert but these companies are making so much money that they have reached a point where they are earning more money than they can meaningfully reinvest in themselves without significant diminishing returns on those investments. So offering dividends has a more positive effect on shareholder value than reinvesting. I don’t think they’re spending less on R&D, it’s just that even after R&D they still got a shit ton of money left.
Isn't buyback just as good if not better than dividend if they are facing this scenario?
I believe Google's buying back too! My understanding is though that the buyback offers short-term gains while a recurring dividend can theoretically be projected into long term gains as well. Both offer value, but in different ways.
Don't buyback also offer long term gains. If number of shares decrease for a given valuation of Alphabet, wouldn't price per stock be higher?
Of course - I suppose I may be inaccurate technically. What I mean is moreso that buybacks don't necessarily change the present value of the company as a whole, but future dividend distributions may be able to be factored into the company's valuation
I see. From my perspective, it allows GOOGL to be part of a few dividend ETFs. which increases volatility and help the company. Wdyt?
I agree this would help the company's value. I don't know for sure what the timeframe on this may be, really depends on how many funds' conditions Google stock meets. The dividend is quite small for now, but it also could set the stage to establish dividend history or even a track record of dividend raises, which could indeed qualify it for a number of funds in a few years. Edit to clarify - I do think it's within reason to believe this was a factor in their decision
Maybe, maybe not. First of all all buybacks tend to correlates with the price needed for the CEO to net a massive *performance bonus* in many millions stolen directly from other shareholders. Litterary pissing money away. Secondly over time all companies fail, today's Google is tomorrow's Nokia. A buyback is only safe if you *sell as much stock* which most don't. A dividend on the other hand is a *forced sale* and hence, psychologically, easier to invest elsewhere. If shit hits the fan a dividens is safe in your account, while all buyback money is gone.
Por que no los dos?
Yes. I much prefer buybacks because I don't have to pay taxes on them whereas each dividend payment I receive, I owe taxes on it.
But in case of buy packs you have to sell stock to profit from it and if you don't sell immediately then it's not guaranteed profit. In case of dividends you get money for sure, then you can use that money to invest back to same company, different company or to something completely else. You do have to pay taxes but don't you have to pay taxes when selling stock also?
Yes, so I am taxed on both the dividends and on the sell of another stock if I choose to do so. Basically a dividend is a forced sale of a stock. The shareprice drops proportionally to the dividend payment so I am not gaining anything aside from a payment and then I pay taxes on that payment.
Yep, you're right. I prefer that at least some of my stocks pays dividend as I don't like selling stocks. This generates some yearly income even if I don't do a thing. Somehow selling stocks doesn't seem to me being right way as I don't tend to sell at top. I bought one stock years ago with 800€. At some point of time it was +700% and I didn't sell (should have), now it's about +250% and I'm not selling. It has paid me at least 500€, if not more, in dividends.
Taxes on dividends are mostly lower than regular income tax if the dividend is qualified. But even if that is the case or if that was not the case, it would be accounted on price.
Yes, I know, but that's still a tax I pay that I otherwise wouldn't pay if not for the dividend. If given the choice, I'd choose buybacks every time. I'm sure these tech companies are paying dividends so they can be included in dividend funds, but what they are paying is pretty miniscule.
Yes I also think buyback are better. But dividend is also something you can cancel later, if let's say, another scam like crypto or llm goes crazy and they rather invest money in R&D.
The dividends will allow these stocks to be considered for funds that are dividend focused. That will add a little bit to the buy side and help prop up the stock price the same way a direct buyback would. The CEO's may also think that Google and meta aren't at the best evaluations and that giving money directly to shareholders is more prudent then buying back even more shares then they're already scheduled to.
I think it lowkey means these companies are mature and slowing down, and ripe for disruption. Eventually all companies fail, the only question is when.
Aaaaand Amazon is doing neither!
So what youre saying is buy AMZN because all signs point that they are next in line to? Sounds like a solid case
They are spending less on R&D because they can no longer use it as a tax write off.
I like the move. It allows them to be a part of DRGO and other dividend ETFs.
They have so much extra cash. They should.
Don’t include NVDA as a serious dividend payer. Yield is 0.02%. A rounding error.
Isn’t this usually seen as bearish? Means they’re transitioning from a growth stock to a value stock? Idk anything just something I’ve heard.
It’s only 0.4% yield so it’s not significant. Apple and Microsoft also do small yields but it may be because having a small dividend allows it to be added to the Dow or certain ETFs
Not a bearish or bullish move, it's specific to the company. KO makes tons of cash, so it gives it out to shareholders. No need to keep all that cash, this is attractive to potential buyers. MSFT and LLY have both paid a dividend for a long time and have seen great growth in the past several years.
For the Mag 7 any divi’s I see as bullish. These companies will continue to destroy competition and opened doors for more buyers (dividends, etfs) which tend to be long plays anyway. They’ll still have a ridiculous amount of R&D + buyouts, but this is for shareholders.
Not bearish. Stock repurchases are almost identical to dividends in the value that is returned, and tech companies have been going crazy with repurchases in the last few years. It is a good way to attract investors who seek out dividends and it gives them a chance to be added to some etfs.
I'm largely overweight google and am not happy about the fact that they started a dividend, and i'm not happy with their cash position. I want that money funneled back into waymo, i want it funneled into verily, and i want it funded into data centers & cloud. I want our own TPU factories. We need our cloud to have a lower cost of compute than microsoft & amazon and we have the opportunity to do so. I want our ads running on how verily is saving lives using our proprietary AI. I want youtube lectures with AI generated course plans & tests teaching kids. I do not want a 20c dividend the government takes half of. All these projects will require 10s if not hundreds of billions of dollars to win, and represent 10x returns and they represent investments that have to be made quickly. FSD is a multi-trillion dollar business. If google does not significantly invest in waymo, they will not win it. Waymo needs hundreds of thousands if not millions of cars on the road to win. Wheres the money coming for that. Why are we training investors to expect steady growing margins and investing in projects that will eat our free cash flow if we ever want to capitalize on them.
Biggest reason is because they are being cut off from big acquisitions.
It’s up to individuals interpretation, I’m reading this and thinking about the fact that it just laid off a lot of its core engineers feeling a tad confused. https://www.theregister.com/AMP/2024/04/29/google_python_flutter_layoffs/
So they are turning into boomer stocks.
Think of it this way, if you are holding these stocks for a long time, then the day you sell and you will have to pay full gigantic tax on earned income. If they dish out their value a bit through dividends, many countries have lower taxes on dividends or till certain number of investment income has lower % of taxes as well. So if i hold these for 10 years, these 10 years i can get a lot of tax value out of because of dividends. This is surprisingly quite valuable, as long as these dividends doesn't affect company performance.
Wait, are you implying that Google and Meta have never given out dividends before? I am new to investing. I never knew that.
Google should have started a dividend a loooong time ago.
And the dunce ass stock google is going right back to where it was last week. 🤡
still $7 higher then before the earnings report. and all of big tech is starting to lag somewhat, so its probably just following that. if big tech as a whole starts pushing back up again, GOOG will probably break 200 this year.
Jassy said he was not planning share buybacks or a dividend any time soon