Google parent company AlphabetsaidThursday 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.
But now it’s changing things up.
And in doing so, it’s looking like more mature companies in other industries.
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.
A new trend for the tech industry?
So, why is Google suddenly having a change of heart?
The company didn’t say.
But it may be following the crowd.
To be sure, dividends haven’t been universally avoided by tech companies.
But to say thattechnology companies prefer dividendswould be a gross overstatement.
Even when tech companies issue dividends, they typically deliver less cash back to investors than other sectors.
And perhaps most importantly, they’ve now matured to a point where issuing dividends makes sense.
“They are dominant, maturing, high cash flow producing businesses,” Devitt said.
“Plus, it opens up the stock to investors that have a dividend mandate.”
And for investors who desire annual returns, tech companies like Meta and Alphabet have been nonstarters.
But Devitt believes it’s only a matter of time before others follow Meta’s and Alphabet’s lead.
