Our “Off The Wall” Blog
is now Monument #Unfiltered
Subscribe below to receive our unique, straight-forward, unfiltered wealth advice delivered straight to your inbox.
All Grown Up – Google Announces a Dividend!
Google ($GOOGL) – one of 20 constituents in the MWM Growth Model – has finally entered the realm of dividend-paying stocks, announcing a $0.20/share quarterly cash dividend, along with a fresh $70B share repurchase amount. It’s not earth-shattering in terms of yield – the $0.20 quarterly payout is approximately 0.5% on an annual basis – but it does serve as a watershed moment for one of the most transformative tech companies of the last 30 years.
To quote an advisor friend who is quite knowledgeable of Google’s fundamentals: “[The] Market loves the divvy because Google loves to light cash on fire on ‘other bets,’ so it’s nice to see some semblance of capital allocation.”
For us – who of course rely far less on bottoms-up fundamental analysis and more so on “technical” price data – the dividend simply serves as one catalyst that may bolster already-strong absolute and relative price trends, as illustrated below. I’d note the green line on the bottom panel represents Google’s relative return vis-à-vis the S&P 500 – upward sloping good, downward sloping bad. I’d also note that on the margins, Thursday’s dividend announcement may unlock additional investors –such as institutions who are mandated to own only stocks that pay dividends, no matter how small and “token.”
It also gives me an excuse to repost one of our favorite graphics from Ned Davis Research, which illustrates the returns of S&P 500 cohorts by dividend policy. Might we be looking at the beginnings of Google’s journey to dividend aristocrat status?
Lastly: it’s worth noting that after Google and Facebook (yes, technically Alphabet and Meta) announced dividends this year, only one member of the Magnificent Seven has yet to initiate a regular quarterly cash dividend, which is of course Amazon ($AMZN). Pure, unbridled speculation on my part, (meaning do not trade on this, it’s just a guess) but I would imagine Amazon spins off Amazon Web Services into a separate, publicly traded company before announcing a dividend. The below table illustrates the date of each company’s dividend initiation announcement, the distance of that announcement from IPO, and the annualized total returns of each stock pre- and post-announcement.
Erin M. Hay, CFA
Private Wealth Advisor, Portfolio Manager
A graduate of the University of Oklahoma, Erin began his investment management career with J.P. Morgan Private Bank. There, he worked with portfolio managers, traders and asset class specialists to bring tailored investment solutions to his team’s high net worth clients. However, intellectual curiosity would dictate both a change in geography and job description.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
A copy of Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.
Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.