Google parent company Alphabet said Thursday that it would issue its first-ever dividend to shareholders. The dividend is just 20 cents a share, but it was notable as a first-time event. In addition to investors receiving a dividend, Google’s co-founders, Sergey Brin and Larry Page, will receive a dividend of $146 million and $78 million, respectively.
Since its founding in 1998, Google has returned money to its investors through outsized performance and growth in its stock price. But now it’s changing things up. And in doing so, it’s looking like more mature companies in other industries.
Perhaps most importantly to investors, Alphabet said it will continue to pay quarterly dividends going forward, as long as market conditions and the company’s performance during those periods allow for it.
Why dividends matter
Dividends act as an important tool in the corporate world, allowing investors in a company to generate cash from their investments without needing to sell shares. Dividends are often used as a signal to Wall Street that a company is performing well, has cash to burn and wants to share that value with investors. They’re also used by companies to boost a stock price when investors are concerned about its long-term prospects.
Dividends are used differently by various industries. In the real estate industry, dividends are commonplace and used liberally by companies to entice shareholders.
In the tech industry, however, some of the biggest companies, including Amazon, Alphabet and Meta, have rejected dividends in favor of reinvesting cash back into their businesses to generate more profits, grow their services and ultimately increase shareholder value by boosting stock prices. The moves have worked: In just the past five years, Meta’s stock price has more than doubled, to $441, Alphabet’s shares have nearly tripled, to $158, and Amazon’s shares have jumped from $97 five years ago to $173 today.
A new trend for the tech industry?
So, why is Google suddenly having a…
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