In March of this year, Meta Platforms (META -0.59%) officially became a dividend-paying stock by making its first $0.50 per share distribution. Two more quarterly payouts have occurred since then, with the most recent taking place on Sept. 26 to those who held shares as of the close of business on Sept. 14.
Meta Platforms' dividend is modest, but it marks the start of a new era for the company
Meta distributes dividends four times a year, so, at the current payout level, that amounts to $2 per share annually going to stockholders.
As of this writing, Meta's dividend yield (its annual dividend payment divided by its stock price) is about 0.35% -- which is low compared to many dividend-paying stocks. The average yield among its fellow S&P 500 stocks is about 1.3% today.
Yet what's truly important about Meta's dividend is that it exists. It shows that the company's management is dedicated to returning value to shareholders. It's also a sign that the company's fundamentals are sound and its balance sheet and cash flow can support the dividend payments.
Will Meta Platforms pay a larger dividend in the future? Almost certainly. In the second quarter, Meta generated $10.9 billion in free cash flow. That more than covered the company's next round of dividend payments, which should total around $1.27 billion.
What's more, over the last decade, Meta's free cash flow has increased by more than 800%. If that trend continues, the company will have even more cash flow available to support higher dividend payments well into the future.
