Apple, Meta, and Salesforce recently announced new dividend payments, which has excited and cautioned investors. Daniel Peris, an investment historian and manager of dividend-focused portfolios, shared his thoughts on the news.
“I’m delighted that these companies have started paying dividends,” Peris said. “But the overall transition, driven by the return of normal interest rates and other factors, may take several years to fully materialize.”
Peris pointed out that Meta and Google still combined their dividend payouts with large share buybacks. “The yield on Meta and Google is minimal, though not zero,” he noted.
This shows that while the move is a good sign, it is not yet a significant source of income for dividend investors. Several factors contribute to the expected shift where dividends become more critical in company valuations. As interest rates return to normal levels — companies must compete for capital by offering cash returns.
Peris explained that companies were able to attract investments by promising unlimited growth and falling interest rates for a long time.
Corporate caution amid dividend announcements
As this period ends, they will need to adopt a “cash on the barrel” approach to keep investor confidence.
Peris also mentioned the impact of geopolitics on this shift. He talked about the political and economic changes since 2020, including the COVID-19 pandemic and the move toward de-globalization. “We are witnessing a departure from past consensus on issues like globalization and neoliberalism,” he stated, “which introduces substantial risks for investors.”
Global economics and politics uncertainty could affect market trust and investment strategies.
Peris warned that low-trust societies do not maintain high valuation multiples, which could have long-term effects on stock market returns. While the trend of more companies starting to pay dividends is promising, it also presents challenges. Dividend investors now have more choices but must carefully analyze which companies provide sustainable income.
This increased work highlights the importance of thorough research and strategic decisions in dividend investing. In conclusion, while Apple, Meta, and Salesforce’s start of dividends is a positive sign, experts recommend a cautious approach. The broader transition towards a cash-focused investment model is happening but will require time and careful navigation through changing economic and political landscapes.
