Meta Platforms (NASDAQ:META) made waves on Wall Street when the company announced its upcoming first dividend distribution. The payment size may disappoint veteran yield seekers. This shouldn’t alter anyone’s long-term META stock outlook, however. I encourage investors to consider buying shares even if they’re not impressed with the yield.
Sure, you can buy Meta Platforms stock because the company delivered an undeniable fourth-quarter 2023 beat-and-raise combo. Or, maybe you just want to invest in Meta Platforms before the company’s market capitalization eventually reaches $2 trillion. If those aren’t good enough reasons for you, I’ll give you some more in a minute. First, let’s discuss the dividend that everybody’s talking about.
Calculating the META Stock Dividend
Meta Platforms’ upcoming first-ever dividend payment will only be 50 cents per share. My calculator tells me that, if we say META stock is trading at $470 per share, then the dividend yield would be 0.1% per quarter or 0.4% per year.
I’ll admit, that’s nothing to write home about. Seasoned yield hunters surely won’t be impressed with a 0.4% annualized dividend yield, but don’t get hung up on that number.
Really, investors should view Meta Platforms’ dividend distributions as the icing on the cake, or a nice little bonus. Besides, Meta Platforms announced a $50 billion increase in the company’s share-repurchase program.
That’s another way the company is showing respect for its long-term stockholders. Share buybacks reduce the pool of publicly available shares, limiting the supply somewhat. It’s a sign of confidence if Meta Platforms is buying its own stock.
Is Meta Platforms an ‘Unsung Hero’ in AI Technology?
Here’s another reason to invest in Meta Platforms, and it has nothing to do with dividends. If you’re looking to get some exposure to artificial intelligence technology in your portfolio, it makes sense to buy META stock.
Interestingly, one analyst seems to suggest that Meta Platforms is underappreciated in the AI domain. In an interview, Raymond James Managing Director Josh Beck called Meta Platforms “a little bit of an unsung hero” in the area of AI technology.
That’s a take I’d never heard before, but it makes sense if you really think about it. People think of Meta Platforms as a bellwether of social media and the metaverse. Yet, there’s no denying that Meta Platforms is embedding AI functionalities into its products.
In case there was any doubt about this, Meta Platforms CEO Mark Zuckerberg declared that his company is “playing to win” in AI. Zuckerberg added, “Expect us to continue investing aggressively in this area.”
Beck, meanwhile, feels that “some of the incremental monetization opportunities in advertising” for Meta Platforms have “gone unnoticed.” With that observation, the analyst envisions a massive growth opportunity for Meta Platforms this year.
“So think about serving content that’s more personalized, it’s more likely to generate an interaction,” Beck wrote. “That’s really helpful to Meta’s model. And that’s why we actually think they can grow 2x the ad industry in ’24.”
META Stock Outlook: Don’t Fret About the Dividend!
Meta Platforms’ dividend may look tiny after you pull out your calculator, but don’t obsess over that. If the Meta Platforms stock price appreciates and the company’s market capitalization grows, the shareholders should be rewarded handsomely.
Furthermore, it’s positive news that Meta Platforms plans to repurchase its own shares and invest in next-gen AI technology. So, instead of fretting about the size of the dividend, just relax, maintain a bullish META stock outlook and consider buying a few shares today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
