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Investors seeking reliable sources of income should consider these three tech giants: Apple, Meta Platforms (formerly Facebook), and Alphabet (parent company of Google). While these companies are known for driving price appreciation, they have also started paying dividends.
Apple has been returning more cash to shareholders than any other company. Its recently announced share repurchase program worth $110 billion will reduce the number of shares (boosting earnings per share). The dividend payout ratio is currently 15% of cash flow, leaving ample room for future growth. Apple’s vast distribution network for new products, consisting of over two billion active iOS devices globally and expanding middle-class populations in countries like India, presents an excellent opportunity for further growth. Though Apple’s revenue growth has slowed down, earnings per share still have potential for substantial expansion.
Google’s parent company, Alphabet, introduced its first dividend payment during its first-quarter results. This quarterly payout could amount to $0.80 annually, representing an initial 0.5% yield. Alphabet is one of the largest cash generators in the world, and it’s safe to assume that this dividend will increase significantly over the coming years. Alphabet’s advertising income continues to expand, indicating further cash flow growth ahead.
Facebook’s parent company, Meta Platforms, has begun paying dividends following the examples of Apple and Alphabet. Though its stock value has fallen due to CEO Mark Zuckerberg’s announcement regarding continued heavy investment in artificial intelligence, this could prove an excellent chance for long-term investors to acquire this future dividend powerhouse at a lower cost. Meta is experiencing rapid growth, with revenue increasing by 27% year-over-year in Q1. Experts predict several years of double-digit growth and many years of double-digit dividend hikes. Although the current dividend yield is low at 0.1%, the payout ratio is only approximately 10% of free cash flow and a lower proportion of operating cash flow. Meta is a true compounder, delivering consistent earnings and cash flow returns to shareholders.
Investors interested in investing in these companies with limited funds may want to check out The Motley Fool’s Stock Advisor service, which offers a simple roadmap to success, frequent updates, and two fresh stock recommendations every month. Since its inception in 2002, this service has surpassed the return of the S&P 500 by more than four times*.
*Stock Advisor returns as of May 6, 2024
Randi Zuckerberg, formerly Facebook’s Director of Market Development and Spokesperson, is a board member of The Motley Fool. Suzanne Frey, a senior executive at Alphabet, is a board member of The Motley Fool. Justin Pope does not own any shares of any of the companies mentioned. The Motley Fool holds positions in Alphabet, Apple, and Meta Platforms, and has a disclosure policy.
The Smartest Dividend Stocks to Buy With Under $1,000 Right Now is an article previously published by The Motley Fool.
In summary, these tech giants offer appealing dividend opportunities for investors seeking reliable income streams. Apple’s extensive distribution network, Alphabet’s rising cash flow, and Meta’s promising growth prospects make them compelling choices for long-term investors. For investors with limited funds, The Motley Fool’s Stock Advisor service provides valuable insights and recommendations. The Motley Fool maintains transparency policies and discloses relevant partnerships.
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