3 Reasons Meta Platforms Is a Great Dividend Stock

Key Points

• Meta's dividend is tiny today, but the payout ratio is low and covered by a massive stream of free cash flow.

• Management already raised the dividend once and continues to return far more via buybacks.

• A resilient, high-margin ads engine and disciplined spending give the dividend years of runway, despite heavy artificial intelligence capital expenditures.

• 10 stocks we like better than Meta Platforms ›

Meta Platforms (NASDAQ: META) has been on a tear since late July's results, as the company's strong results helped investors refocus on the strength of its ads business and its ambitious long-term artificial intelligence (AI) plans. The social-media and advertising company behind Facebook, Instagram, and WhatsApp also kept up a theme it started when it began ratcheting up its capital return program in 2021 (first with repurchases, followed by dividends a few years later): sharing more of its abundant cash with shareholders.

Meta's dividend is young and modest. But that does not make it a weak dividend stock. In fact, three core elements suggest the opposite: a conservative payout policy, a demonstrated commitment to ongoing cash returns, and business fundamentals that can support years of dividend growth.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

1. A small payout backed by huge, recurring cash flow

One area Meta's dividend is particularly attractive is when it comes to its ability to cover its dividend payment. In the second quarter of 2025, Meta generated about $8.6 billion of free cash flow (the cash flow left over after both regular operations and capital expenditures are taken care of) and paid $1.3 billion in dividends. That is roughly a mid-teens payout of quarterly free cash flow. The company also earned $18.3 billion of net income, putting the dividend at only about 7% of quarterly earnings -- a conservative setting that prioritizes durability.

Also helping, Meta ended the quarter with over $47.07 billion in cash, cash equivalents, and marketable securities, adding further flexibility.

These figures matter because they show the dividend is not stretching the balance sheet or crowding out investment.

2. Management already raised the dividend -- and is returning far more through buybacks

A good dividend stock is not just about the yield. It is about policy and behavior. Since declaring its first regular dividend late in 2024 at $0.50 per share, Meta increased the quarterly payout by 5% to $0.525 in February 2025 and has maintained that level through midyear. Beyond the dividend, Meta has been aggressive with repurchases. In the first half of 2025, it bought back over $23 billion worth of stock while paying about $2.7 billion in dividends over the same period. As of June 30, the company still had more than $28 billion remaining on its repurchase authorization, leaving ample capacity to keep shrinking the share count and boosting per-share results over time.

3. A resilient core business supports years of dividend growth

Why should investors expect this dividend to keep growing? The underlying business is strong and getting more efficient. In the second quarter, revenue rose 22% year over year to $47.52 billion, operating margin expanded to 43%, and earnings per share increased 38% to $7.14.

Additionally, engagement and monetization drivers looked healthy, with ad impressions up 11% and average price per ad up 9%.

Looking ahead, there's a lot to be upbeat about. The tech company is investing heavily in AI infrastructure, expecting $66 to $72 billion of 2025 capital expenditures and signaling another year of significant capex dollar growth in 2026. Yes, this is a risk, but Meta is doing this from a position of strength. In the company's second-quarter earnings call, Meta CFO Susan Li underscored that second-quarter free cash flow was $8.5 billion even after elevated capex.

These dynamics -- strong growth, healthy cash generation, and investments in growth opportunities -- support the case for steady dividend increases alongside continued reinvestment.

There are risks to watch, of course. Meta continues to flag active regulatory headwinds, particularly in Europe, where potential changes to its "Less Personalized Ads" offering could weigh on revenue. And the step-function in AI capex will pressure free cash flow in some quarters, especially if macro conditions soften. But the lucrative company and its dividend should fare just fine, even if it runs into unexpected legal expenses. The payout starts from a very low base with a small yield today -- roughly below 0.3% at recent prices -- because most of the shareholder return still flows through buybacks. For investors, that combination can be attractive: a cautious dividend that is already growing, paired with material repurchases funded by a high-margin, cash-rich core.

Should you invest $1,000 in Meta Platforms right now?

Before you buy stock in Meta Platforms, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $671,288!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,031,659!*

Now, it’s worth noting Stock Advisor’s total average return is 1,056% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 8, 2025

Daniel Sparks and his clients have 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.