Google Pumps Own Stock via Dividend Program and $70 Billion Buyback
Google Pumps Own Stock via Dividend Program and $70 Billion Buyback

BY Enrico Trigoso

Alphabet Inc. announced a first-time-ever dividend program and a $70 billion buyback of its own stock that could revitalize the tech company for the next year.

The company’s shares, both Class A and Class C, experienced a big surge of over 11 percent in post-market trading on Thursday, reaching approximately $175 and $176.70, respectively.

On April 25, Alphabet unveiled its first-quarter 2024 results, which surpassed expectations. The company reported a 15 percent year-over-year increase in revenue to $80.54 billion, outperforming the consensus estimate of $78.59 billion. In addition, Alphabet revealed quarterly earnings of $1.89 per share, exceeding analyst forecasts of $1.51 per share.

The company introduced a cash dividend program, declaring a dividend of $0.20 per share to be disbursed on June 17, 2024, to shareholders recorded as of June 10, 2024. The company also outlined its intention to issue quarterly cash dividends in the future.

“The Alphabet Board of Directors has authorized the commencement of a cash dividend program and declared a cash dividend of $0.20 per share, payable on June 17, 2024, to stockholders of record as of June 10, 2024, on all of the company’s Class A, Class B, and Class C shares,” its earnings release disclosed. “The company anticipates issuing quarterly cash dividends going forward, subject to evaluation and approval by the company’s Board of Directors at its discretion.”

The moves to pump the stock come after Google let go of hundreds of workers across multiple teams in January, including its engineering, hardware, and assistant teams as the company ramps up investment and builds its artificial intelligence offerings.

The layoffs follow a slew of job cuts across Google, notable in the tech and media industry during the past two years, adding to fears that layoffs may continue as companies grapple with reassessing their financial strategies.

Shoug Mayson, senior private wealth manager of Spartan Capital, believes that this move, plus the buyback of the company’s own stock, will have a huge impact on next year’s economy.

“Usually, tech stocks don’t pay dividends, it’s not normal. But that means the company is so solid, that they have the room to pay dividends,” Mr. Mayson told The Epoch Times.

Mr. Mayson explains that investors seek stability in dividends, especially seniors relying on fixed incomes, and that tech companies without dividends lose out on older investors’ portfolios.

“Investors will be drawn in by this development. Consider seniors, individuals on fixed incomes, who rely on dividends for stability. If they can receive annual dividends without selling stock, say $5,000 on a $100,000 investment, they can manage expenses without liquidating assets. Many older investors avoid tech stocks due to risk and lack of dividends. But now, they have reason to reconsider. The influx of funds into companies like Google is inevitable.”

$70 Billion Buyback

On top of that, Alphabet’s board of directors authorized a stock repurchase program totaling up to $70 billion of its Class A and Class C shares.

According to Mr. Mayson’s analysis, a $70 billion buyback plan not only lifts stock prices, but also demonstrates a firm’s dedication to shareholders.

“They’ve unveiled a massive $70 billion stock buyback initiative, signaling a bullish stance that’s bound to drive up stock prices. This move not only boosts shareholder value but also underscores their commitment to investors. By repurchasing their own shares, they’re effectively returning capital to shareholders, increasing the value of each share—an action tantamount to putting money directly into investors’ pockets.”

Ruth Porat, Alphabet’s president and chief investment officer said: “Our strong financial results for the first quarter reflect revenue strength across the company and ongoing efforts to durably reengineer our cost base. We delivered revenues of $80.5 billion, up 15 percent year over year, and operating margin expansion.”

Gemini Versus OpenAI

Earlier this year, Alphabet saw its shares dip below the 50-day moving average amid scrutiny over its “Gemini” artificial intelligence system.

At the time, Google had to halt the capability for users of its chatbot to create human images due to concerns raised after users generated images depicting black Founding Fathers and other historical figures inaccurately.

The company acknowledged the inaccuracies in historical depictions while some analysts speculate that it could have been an intentional publicity stunt.

The Microsoft Corp. logo outside the Microsoft Visitor Center in Redmond, Wash., on July 3, 2014. (Ted S. Warren/AP Photo)

Google is competing with OpenAI, backed by Microsoft, to advance training models for AI systems that can produce various media such as text, images, sounds, and video.

During its earnings report, Microsoft said that its AI services contributed to a 7-percentage-point growth in revenue for Azure and other cloud services, up from 6 percentage points in the previous quarter and 3 percentage points in the quarter before that. This constitutes an increase from the 1-percentage-point contribution reported in fourth quarter of the previous year.

Reuters contributed to this report.

USNN World News (USNN) USNN World News Corporation is a media company consisting of a series of sites specializing in the collection, publication and distribution of public opinion information, local,...