Meta (Nasdaq:META) inventory skyrocketed after its earnings and announcement that it’s going to start paying a $0.50 dividend.

What’s the way forward for Fb’s dividend? Motley Idiot Canada analyst Nate Parmelee discusses on this video (transcript beneath).

Transcript

I’m Motley Idiot Canada analyst Nick Sciple, and that is the “5-Minute Main” right here to make you a wiser investor in about 5 minutes. Right now we’re Meta Platforms‘ (NASDAQ:META) newest earnings report, which shocked the market with an enormous beat and a first-ever dividend. My visitor as we speak is Dividend Investor Canada lead advisor, Nate Parmelee. Nate, thanks for becoming a member of me.

Nate Parmelee: Thanks for having me

Nick Sciple: Nice to be right here with you, Nate. Meta shares up over 20% intraday in response to this newest earnings report. What had been your largest takeaways from the announcement?

Nate Parmelee: So two huge issues stood out to me with the earnings launch. The primary is simply how a lot of their progress proper now could be being pushed by Chinese language e-commerce and promoting that’s happening on Fb and on their different platforms, in all probability most recognizable by Temu, which appears to be on the market promoting in all places with all of the offers they’re attempting to do to get their platform going.

The second factor that stood out to me is the dividend. That’s the factor all people’s speaking about, which which isn’t large, and so they nearly by no means are to start out. However anytime you see an organization put the dividend on the market, it’s often a dedication to start out returning capital to shareholders.

Nick Sciple: That’s proper. It’s doing all this whereas nonetheless investing within the metaverse, the following way forward for computing. So let’s speak about that dividend beginning out at $0.50 1 / 4. It doesn’t appear that a lot for a inventory that now, after this newest submit earnings pop, is over $450 per share, however issues can get quite a bit greater over time. Nate, you spend a good bit of your time dividend shares right here at Motley Idiot Canada. How do you price Meta’s possibilities of turning into the following nice dividend inventory?

Tech shares as dividend shares

Nate Parmelee: You already know, it’s attention-grabbing as a result of we don’t consider tech shares, even those that pay dividends like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT), as being nice dividend payers. However they really might be. And nice dividend growers, which occur to be one of the best dividend shares of all — those that develop their dividends really carry out one of the best over the long run. Meta is admittedly set as much as be precisely that sort of firm if they will maintain their advert income. They’ve tons of money move. They ooze money move from the advert income. Their platforms — they should put money into them recurrently — however they beautiful a lot run themselves. There’s a lot of scale there, and it’s recurring money move. You’ve acquired a shareholder and a CEO who owns 13.5% of the shares. I’m positive he’d prefer to take a few of that dwelling as an proprietor as effectively with out paying it out in bonuses and different methods like that. These are all sort of traditional indicators you search for in an organization that may be an important dividend grower over the long run. So we don’t consider tech shares that approach. However I might say, Meta is about as much as be, possibly, like Microsoft, the place you see a sub-1% dividend yield. However they’re upping that dividend 8%, 9%, 10%, 12% each single yr. And it’s actually spectacular. As a shareholder, you possibly can look again and purchase it at a 1% yield. After which, 8 or 9 years later, rapidly, you’re getting a 5%, 6%, 7% yield in your buy worth, and also you don’t give it some thought that approach on the outset, if you’re shopping for the shares you’re not like, “Oh, I’m gonna get a ton of earnings from this inventory.” You’re fascinated about the expansion. So it’s a kind of shares that may be, I feel, actually useful to folks in the long run once they’re wanting 5 or 10 years down the highway and planning out their portfolio on how they’re going to speculate.

Nick Sciple: Yeah, very uncommon to see an organization on the innovative of recent know-how additionally turning into a possible earnings funding. Nate, thanks a lot for becoming a member of me for this addition of the “5-Minute Main,” and we’ll see all people subsequent time.

Nate Parmelee: See you subsequent time.