Meta dividend payment points to a ‘coming of age’

Meta is paying its first-ever dividend as it tries to win round Wall Street and convince shareholders that years of unproven bets on the metaverse and costly new investments in artificial intelligence will deliver results.

The parent company of Facebook, Instagram and WhatsApp, which reported fourth-quarter earnings on Thursday, is authorised to return up to $86bn to its shareholders this year alone, with quarterly dividend payouts of 50 cents a share and a $50bn share buyback programme.

This is on top of the $31bn it has remaining under a repurchase plan announced last year. Mark Zuckerberg, Meta’s chief executive, stands to receive about $175mn in quarterly dividend payments for his 350mn shares in the group.

Meta’s first dividend, at 50 cents a share, is relatively small, ranking 31st in the S&P 500 by the total amount paid each year. But it signals that the social media group is committed to returning cash to investors in the longer term.

It also serves as an indication of a maturing corporate culture that could show the company is increasingly willing to play by Wall Street’s rules. Meta shares rose more than 15 per cent in after-market trading.

The move hints at Meta’s thinking about its future growth. Shifting political attitudes towards Big Tech mean the company would face serious regulatory opposition if it tried to make a large purchase — its acquisitions of WhatsApp and Instagram are already facing antitrust scrutiny. As a result, it has less need for a large cash balance.

“It is a coming of age,” Howard Silverblatt, senior index analyst at S&P, said of the dividend announcement. “It is a signal that they feel they have, and will continue to have, expectations of higher cash flow.”

Big Tech has traditionally avoided paying dividends to shareholders, instead preserving large cash piles that can be reinvested to fund new growth initiatives and protect against disruptive changes in the sector. When Microsoft started paying a dividend in 2003,…