The co-founder of Facebook may be more aligned with shareholders than ever before.
When Mark Zuckerberg co-founded Facebook 20 years ago, I wonder if he imagined the heights his company would reach. The company -- now called Meta Platforms (META 2.98%) -- just capped off 2023 with record revenue and record profits in the fourth quarter. The market responded to these results by pushing the stock's market cap up to $1.2 trillion.
As a co-founder, Zuckerberg naturally owns a lot of Meta Platforms -- he currently owns around 350 million shares. At today's stock price, this has pushed Zuckerberg's net worth up to $169 billion, according to The Bloomberg Billionaires Index.
By owning this much of the company, Zuckerberg has strong decision-making power at Meta Platforms and can pursue projects that appeal to him. This even includes his cash-burning metaverse pursuits.
Meta Platforms records metaverse financials under its Reality Labs business segment. In 2023, Reality Labs lost a whopping $16.1 billion on an operating basis. And this segment has lost $51 billion over the last five full years.
As much money as this is, Meta can afford it. Even with the $16.1 billion drag from Reality Labs last year, the company still had operating income of nearly $47 billion for the year. With that much surplus, it's now looking to return some cash to shareholders through a quarterly dividend.
He may already be the fourth-richest person in the world. But this dividend is poised to make Zuckerberg $700 million richer every year.
Meta's new dividend
On Feb. 1, Meta Platforms' management announced a $0.50 per share quarterly dividend. The company plans to pay this dividend on March 26, and it will be the company's first dividend payment ever.
Since he owns around 350 million shares, Zuckerberg's first dividend check will be for about $175 million. But management plans to pay a dividend every quarter. So at its current payout, Zuckerberg will make around $700 million in annual dividend income.
My Motley Fool colleague Adam Levy points out two benefits to Meta's new dividend. First, other tech giants that have started dividends have continued to pay them and grow them over the years -- Meta's investors can expect the same. Second, this move could attract an entirely new class of investor to Meta stock: Dividend investors.
Both of these things are important. There's also a third benefit that I see with this move: Zuckerberg has more incentive than ever to hold his shares. After all, most of his net worth is in Meta stock. Therefore, he previously needed to sell shares to pay for his wants and needs. Now he can access liquidity by simply holding.
In my view, this aligns Zuckerberg's incentives with common shareholders more than ever. This factor alone could motivate the company to increase the dividend generously over time.
To be clear, Meta Platforms has ample room to grow its dividend for patient investors. In 2023, the company earned nearly $15 per share. At a $2 per share annualized rate, Meta's dividend payout ratio is less than 15% -- extremely sustainable. Assuming its earnings stay stable, the company could increase its dividend at a double-digit annual pace for more than a decade without even blinking an eye.
Therefore, Meta Platforms is likely one of the best dividend-growth opportunities on the stock market today. Granted, investors can't expect anything close to what Zuckerberg will be raking in. But as part of a dividend-growth portfolio, Meta stock could be a solid long-term contributor.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
