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You’re buying a stock now not only for its growth prospects, but also for the income it generates. Investors understandably liked the sound of that, sending shares up 15% the day the news was announced and pushing the company’s value to an all-time high, surpassing all of its post-pandemic losses. It’s entering the realm of headphones.
However, it’s certainly just the first tech giant to start returning cash to owners. Under Steve Jobs, Apple stopped paying any fees — he considered it an insane waste of money he could spend on new products — and since his death, Apple Pay as little as possible.
At some point, that number has to increase. Amazon announced huge profits last week, and initiatives like showing ads on Prime should drive revenue even higher, so it’s certainly only a matter of time before the payouts start.
Google parent Alphabet may not be able to resist paying some of its $113 billion in cash reserves for longer. Netflix is making so much money that it may be forced to give some of it back as revenue surges from a crackdown on password sharing.
Nvidia will have plenty of room to increase the paltry 0.3% it currently pays shareholders, and if Tesla can afford to pay Elon Musk $50 billion, assuming he can overturn a court ruling on the decision, it certainly Ability to pay Tesla some fees. So are its shareholders?
Big tech companies will begin to compete with oil, pharmaceutical and banking groups because of their ability to provide shareholders with huge sums of money every quarter. Given their size, semi-monopoly status and growth rates, they may soon overtake them.
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