Note to Alphabet, Google, Whatever: Pay a Dividend, You Baby
Note to Alphabet… or Google… or whatever you choose to call yourself these days: it’s time to grow up, wear your big-boy pants, and start paying a dividend.
You’re a $500 billion company, for crying out loud, and your biggest rivals — Apple and Microsoft — are among the most generous dividend payers and dividend raisers in the world. For a company that used to pride itself on its “don’t be evil” motto, your stinginess to your long-suffering shareholders seems a little… well… evil.
Is a dividend really too much to ask? You have consistent and reliable cash flows. And over the past 10 years, your earnings per share have grown at a nice clip with no real interruptions.
Sure, your free cash flow per share, which is the more appropriate measure for gauging cash available to be paid as a dividend, has been a little lumpier as capital expenditures have varied a little from year to year. But overall, you, Alphabet, are a case study in a steadily growing business.
And let’s not forget about your money in the bank. You have $73 billion in cash just sitting around. That’s about 14% of your entire market cap. Seriously, what are you going to spend it on? Driverless cars? Well, that $73 billion is nearly three times the entire market cap of leading auto innovator Tesla Motors. You could buy Tesla outright and still have plenty of cash left over for at least a modest dividend.
