### Summary
Alphabet is generating substantial revenue and cash flow, which makes the case for the company to begin paying a dividend. Its strong operating history and opportunities in the field of artificial intelligence (AI) provide the foundation for this move.
### Facts
- Alphabet recorded revenue of nearly $75 billion in the second quarter, resulting in net income of more than $18 billion.
- The company generated nearly $29 billion in operating cash and $22 billion in free cash flow during the quarter.
- Alphabet has a total cash and marketable securities on its balance sheet of over $118 billion.
- The company is well positioned to benefit from advancements in generative AI and is making efforts to make it available via its Google Cloud platform.
- Alphabet has added new AI tools to its product portfolio, including the Bard chatbot.
- Paying a dividend is a way for companies to return capital to shareholders when the amount of cash is more than it can use to generate additional growth.
- Apple's example shows that paying a dividend does not mean stalling growth, as it has increased its payouts by 154% while its stock increased by 729%.
- Alphabet could potentially pay a dividend by using a portion of its profits, such as 16% or 25%, resulting in a yield of about 0.5% or 1% respectively.
- Alphabet has not paid a dividend to date, but management has not ruled out the possibility in the future.
T-Mobile US will start paying a dividend in the fourth quarter, but the stock is dropping.
High-quality dividend stocks, which have been market favorites in recent years, are currently not receiving much respect but now may be a good time to buy.
Summary: Morgan Stanley recommends investors turn to dividend-paying stocks, as they have historically outperformed non-dividend stocks during market downturns. They have identified 26 dividend stocks that could see shares rise up to 85% in the coming months.
Verizon Communications, Cisco Systems, and AbbVie are three cheap stocks that pay dividends, making them attractive options for investors looking to maximize potential returns. Verizon's robust telecom business and projected growth, Cisco's profitability and recent acquisition, and AbbVie's undervalued position and promising assets make them potentially lucrative investments.
### Summary
As earnings season approaches, investors looking for safe bets and potential stock growth might consider Apple, Microsoft, and Alphabet due to their dominance in the tech industry, their expanding business segments, and their strong financial performances.
