Meta Platforms(US:META) The Motley Fool·2025-12-30 03:31Core Viewpoint - Meta Platforms is positioned as a promising dividend stock with significant long-term potential despite its current low dividend yield of 0.3% [3][10]. Dividend and Payout Ratio - Meta's quarterly dividend is $0.525 per share, leading to an annualized payout of $2.10, which results in a low payout ratio of 9%, indicating ample room for future dividend increases [3][5]. - The company has initiated dividend payments only recently, starting last year, and is expected to continue growing its dividend in the future [2][6]. Share Repurchases - In Q3, Meta returned approximately $1.3 billion in dividends and spent nearly $3.2 billion on share repurchases, with Q2 seeing almost $10 billion allocated for buybacks [7]. - The total shareholder yield, when factoring in share repurchases, is significant, even though the dividend yield remains low [7]. Business Growth - Meta's revenue for Q3 increased by 26% year-over-year to about $51.2 billion, showing an acceleration from the previous quarter's growth rate of 22% [8]. - The growth was driven by a 14% increase in ad impressions and a 10% rise in average price per ad [8]. Free Cash Flow - The company reported approximately $10.6 billion in free cash flow for Q3, which is crucial for supporting dividends and share repurchases [9]. Capital Expenditures and Future Outlook - Meta plans to invest $70 to $72 billion in capital expenditures in 2025, primarily for AI computing infrastructure, which may impact the pace of dividend growth in the near term [6][11]. - Management anticipates that capital expenditures will increase significantly in 2026 compared to 2025, indicating a focus on long-term growth strategies [11]. Valuation - Meta's shares are trading at a price-to-earnings ratio of 29, suggesting that while the stock is not overly expensive, it is also not cheap, necessitating continued rapid growth and successful investments in AI [12].