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Sundar Pichai confirms that Alphabet Inc. will issue its first-ever dividend: a $70 billion buyback

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On Thursday, Alphabet Inc., the company behind Google, announced the news that it will pay dividends to all shareholders at 20 cents per share.

Google and Alphabet Inc. CEO Sundar Pichai speaks at Stanford University on April 3, 2024 in Stanford, California. Justin Sullivan/Getty Images/AFP (Photo by JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)(Getty Images via AFP)

This is the key element of the company’s financial agenda, which includes a $70 billion share buyback program in lieu of making new investments. Google saw its shares rise 15% after reporting first-quarter earnings, and it turned out to exceed the company’s expectations. The news came immediately after the publication of Alphabet’s financial results.

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Alphabet Inc. will now follow Meta’s path regarding the history of the formed dividend declaration, which took place in February.

“Our first quarter results reflect the strong performance of Search, YouTube and Cloud. We are well underway with our Gemini era and there is great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation,” said Alphabet Inc and Google’s CEO Sundar Pichai.

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Alphabet’s robust financial position, with $108 billion in cash and marketable securities at the end of March 2024, provides a solid foundation for such shareholder-friendly actions.

The timing of this announcement is particularly notable as it coincides with the one-year anniversary of Alphabet’s previous approval for the repurchase of shares of identical size.

Alphabet’s dividend will be distributed across all share classes, ensuring that both super-voting Class B shareholders and non-voting Class C shareholders are included.

Interestingly, the majority of Google investors own Class A shares.

The intention is for the dividend to be paid to all registered shareholders from June 10, with the payment taking place within the same month.

The consequences of this dividend are significant for Alphabet’s co-founders

Sergey Brin, who owns more than 730 million Class B and C shares, is expected to receive a staggering $146 million payout.

Larry Page, with 389 million Class B shares, will receive a dividend payment of $78 million.

The technology industry is under scrutiny, with investors looking for signs of maturity and stability. Since 2022, major tech companies have initiated layoffs and tightened their financial belts. These austerity measures have been well received by investors, who have also responded positively to the share buyback and dividend initiative.

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Meta’s dividend announcement earlier this year sent the stock up more than 14%.

Amazon is notable for not issuing a dividend or authorizing share buybacks on the scale of Google. Amazon’s largest buyback to date was a $10 billion authorization in 2022.

The e-commerce giant is expected to report its first-quarter earnings next Tuesday.

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