Eve Maddock-Jones, Investment Week, 15 February 2024:
Meta’s newly launched dividend is unlikely to benefit portfolios targeting a high yield, income managers told Investment Week. Instead, the move aims to settle shareholder concerns about the firm’s management and how it is likely to distribute earnings amid its metaverse expansion..
While the dividend offering was well received by markets, managers of income funds targeting high yields said Meta would not be useful in this regard..
James Carthew, head of investment companies at QuotedData, added that while the dividend may not necessarily be useful for helping portfolios hit their dividend targets, it could “potentially attract the attention of investors who, for whatever reason, have a rule of not buying stocks without a yield”.
“In that category, we would find Bankers Investment Trust, which after agonising about missing the price gains on the big tech stocks last year because of this rule is pondering whether to scrap it,” he said.
When asked if the move marked Meta’s transition from hyper-growth tech stock to a mature company, Carthew argued it was not necessarily a watershed moment.
“Largely, it is a question of perception,” he said.
“Why has Meta not got enough exciting growth opportunities to spend its spare cash on? There are questions about whether a stock that big can continue to maintain an above average growth rate, one that markets have dismissed for now given the excitement around AI, but one that could return.”
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