Battle of Dividend Stocks: Microsoft vs. Meta Platforms

Core Viewpoint - Microsoft is recognized as a leading tech company in dividend payouts, while Meta Platforms has recently initiated a dividend with potential for growth [1][12]. Group 1: Microsoft - Microsoft has a dividend yield of approximately 0.6%, with a quarterly payout of $0.83 per share, marking a 10% increase from the previous year and the 20th consecutive year of dividend growth [2][4]. - The company's dividend payout is sustainable, consuming only 24% of annual earnings and one-third of annual free cash flow, supported by a robust business model [5][6]. - In fiscal 2025, Microsoft reported $281.7 billion in revenue, a 15% year-over-year increase, and returned over $37 billion to shareholders through dividends and buybacks [6]. Group 2: Meta Platforms - Meta Platforms introduced its dividend last year, recently increasing it by 5% to $0.525 per share, translating to an annual payout of $2.10 [7]. - The dividend yield stands at 0.3%, with only 7% of earnings and about 10% of free cash flow allocated to dividends, indicating conservative financial management [8]. - Meta's second-quarter revenue grew by 22% year-over-year, with earnings per share increasing by 38%, driven by growth in daily active users and advertising metrics [8][9]. - The company is prioritizing share repurchases, having bought back nearly $10 billion in stock while paying out $1.33 billion in dividends [9]. - Meta's capital expenditures are projected to rise significantly, expected to be between $66 billion and $72 billion this year, indicating a shift towards a more capital-intensive business model [10]. Group 3: Comparative Analysis - Microsoft is viewed as the safer dividend stock due to its established dividend history, higher yield, and consistent growth, while Meta is still in the early stages of its dividend policy [12][14]. - Although Meta has potential for future dividend growth, its current lack of a proven history and rising capital expenditures make it a riskier option for income-focused investors [13][14].