A team of analysts from Goldman Sachs Group is predicting that a number of large-cap companies, including tech giants Meta Platforms, Alphabet, and Amazon, are likely to introduce their first-ever dividends in the near future. The increased interest in dividend-paying stocks has led analysts to raise their forecast for the S&P 500’s dividend-per-share payout. Additionally, companies that introduce or increase dividends typically exhibit characteristics such as wide profit margins, stable earnings, an existing program of share buybacks and relatively low valuations.
Since the beginning of 2024, 56 companies in the S&P 500 have raised their dividends by a median of 6%, and this trend is expected to continue with financial and industrial firms leading the charge. The announcement of Meta’s first-ever quarterly dividend, combined with encouraging earnings-per-share growth for the quarter, has led to the belief that other large U.S. companies will also surpass Wall Street’s expectations when reporting their earnings.
The decision to introduce dividends will not only benefit existing shareholders, but may also attract a new group of income-oriented investors. Indeed, the companies are showing confidence about future earnings and could capitalize on the growing interest in dividend-paying stocks. These positive trends indicate a growing recognition among mega-cap companies that dividends are a potentially lucrative route to providing value for their shareholders.