Is Google stock a Buy now that it pays dividends?
Last week, Google (GOOG) paid its first-ever dividend of 20 cents a share, for an annual yield of 0.45%.
Some investors cheered believing this is good news. GOOG is now technically considered a dividend stock.
I strongly disagree. This is the beginning of the end for Google stock.
By paying a dividend, Google is admitting it’s no longer an innovative tech company.
Generally speaking, I don’t believe tech companies should pay dividends.
Why?
Because that money is better spent developing new technologies that add to the revenues and earnings of the business.
But Google’s telling us it’s run out of ideas. It’s AI rollout has been a disaster. It doesn’t know what to do with its money, so it’s returning it to shareholders.
This doesn’t mean Google stock is doomed anytime soon. Companies that don’t invest enough in the future can coast on their past achievements for a time. And Wall Street only cares about what happens next quarter.
But this move shows Google is retreating from the (innovation) frontier, like a once-great empire in decline.
Bottom line: Avoid GOOG stock.
There are much better opportunities to be found buying up-and-coming disruptors profiting from megatrends, like data-center stocks, for example.
***
P.S: For more insights and analysis, subscribe to my investing letter The Jolt⚡.
I publish fresh research every M/W/F.
