Meta’s New Dividend Lures Value Investors

[View in browser]( [The Spill Logo] Proprietary Data Insights Financial Pros’ Top IT Services Stock Searches in the Last Month Rank Ticker Name Searches #1 [META]( Meta Platforms. 285 #2 [GOOG]( Alphabet 254 #3 [SNAP]( Snap 27 #4 [PINS]( Pinterest 18 #5 [BIDU]( Baidu 18 #ad [Power Your Portfolio With Alternative Investments]( Brought to you by [Stansberry Research]( [Fed launches fourth dollar overhaul]( [Stansberry Research - Fed launches fourth dollar overhaul]( You've likely heard a million different warnings about the changes taking place in America's financial system right now... How the White House plans to take the dollar fully digital... Track and monitor every transaction you make... or ban cash forever. You may even have heard our rivals abroad – now known as the BRICS+ group – are preparing to launch a rival currency to "destroy the dollar." The problem is... those wild predictions all miss the real story unfolding in the US financial system today. It involves the US dollar... and a scheme backed by the Federal Reserve, US Treasury, and 41 major banks. This huge shift is bigger than a digital dollar or anything like that... and it could have seismic implications not just for our currency, but for our savings, retirement, and whole way of life. The problem is, I haven't seen anyone out there properly explain what's really going on – and what you need to do to prepare for it. Today I'm stepping forward to change all that. I just posted everything you need to know about it online, including the three steps I recommend you take to prepare, 100% free of charge. [Just click here now for the full story](. Meta’s New Dividend Lures Value Investors In 2022, Meta Platforms’ (META) stock was in freefall. [We said we wanted to own it.]( The stock is up almost 325% since then, and we still like it. Meta wowed investors when they beat the high water market for earnings and revenues. Financial pros kept searching for the stock well after it reported earnings, focusing specifically on Meta’s new dividend, according to our TrackStar data. Now, a $0.50 dividend on a $400 stock might not seem like much. But we’ll explain why this is a game-changer for the stock. Meta’s Business Facebook rebranded as Meta when CEO and founder Mark Zuckerberg decided to plow money into the ‘Metaverse.’ The online virtual ecosystem has lost a lot of its luster. But Meta’s core business, Facebook, is running strong. Meta breaks out its business into the Family of Apps (98% of revenues), which includes Facebook and Instagram, and Reality Labs (2% of revenues), which encompasses its Oculus VR platform. At the surface, everything Meta reported looks phenomenal, with revenues per user up across the board. [Revenue] [Source: META Q4 2023 Earnings Presentation]( However, the picture isn't as rosy if you look deeper into the user activity. [MUA] [Source: META Q4 2023 Earnings Presentation]( Meta’s user growth in Europe is on the decline, while the U.S. and Canada barely budged. That’s a problem, considering these are the highest revenue-per-user markets, with the former at $68.44 per user and the latter at $23.14. Everywhere else is $4.50-$5.52. To Meta’s credit, they’ve done what they said in cutting expenses over the past two years. [Expenses] [Source: META Q4 2023 Earnings Presentation]( This helped Meta achieve record cash flows, enabling them to institute its first-ever dividend. So, why is this such a big deal? We’re seeing value and income investors looking at the stock, according to our TrackStar data, which often happens when a company starts issuing a dividend. We expect this will add a long-term floor under the stock, giving shareholders a level of safety to own against. Financials [Financials] Source: Stock Analysis Financially, Meta is doing amazing. Other than 2022, it’s put up double-digit revenue growth every year. Although margins have declined as the company ventured into new businesses, its free cash flow improved dramatically as expenses dropped. Meta generated $44 billion in free cash flow in 2022 alone, over $17 per share. Operating cash flow reached an astounding $71 billion, although the company guided for slightly higher capex in 2024. Effective in March, the $0.50 dividend per share is on top of the $50 billion stock buyback program and comes to an annual yield of about 4.5%. Valuation [Valuation] Source: Seeking Alpha With the latest run, Meta’s stock is in line with Google (GOOGL) on a price-to-cash flow basis, and in the ballpark on a price-to-earnings ratio. Social media companies like Snap (SNAP) and Pinterest (PINS) are more expensive as they’ve struggled to balance growth and profitability. Baidu (BIDU) is a much cheaper alternative. However, as a Chinese company, it trades at a significant discount. Growth [Growth] Source: Seeking Alpha Although Meta and Google’s valuations are comparable, Meta’s been able to put together higher revenue growth in the short term. While Google isn’t doing poorly, it’s not achieving the level of success it once had. Other social media companies have also been struggling, as advertising spending hasn’t returned to pre-pandemic levels in many sectors. Profitability [Profits] Source: Seeking Alpha The big draw for Meta is the one-two punch of its revenue growth and margins. It delivers the highest in every category while only trailing Google sightly in returns on assets and total capital. Our Opinion 7/10 While we love Meta, we don’t believe it is immune to the soft advertising spending hitting Google and other companies. Shares have gotten ahead of themselves, even if they are reasonably priced. However, we don’t expect as much share volatility going forward now that they’ve begun issuing dividends. So, don’t expect the same pullbacks we saw in the past few years. Take advantage of opportunities as they arise. 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