When most investors think about the "Magnificent Seven," they're typically thinking about growth -- not income. But the truth is that a few of these companies now generate so much cash that they can invest aggressively and still send capital back to shareholders.
Case in point: Meta Platforms (META 0.69%). Though the company's dividend is still young, with the first payments to shareholders starting last year, it's one of my favorite dividend ideas for 2026 and beyond. Not only can the social media company easily afford its dividend, but it also returns capital to shareholders through share repurchases. Best of all, the underlying business has seen explosive growth recently.
Sure, the stock may not be a good fit for someone who needs significant income from their investments. At Meta's current quarterly dividend of $0.525 per share, the annualized payout is $2.10, which works out to a dividend yield of just 0.3%. But what makes Meta interesting is the runway for dividend growth, not just the current yield.
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A payout ratio that leaves wiggle room
A good dividend is only as strong as the company's ability to keep paying it. One way to gauge that is the payout ratio, or the percent of earnings the company is paying out in dividends.
Meta's payout ratio is extremely low, at just 9%.
This means there's significant room in the coming years for dividend increases. Of course, shareholders likely don't want to see Meta's payout ratio rise meaningfully anytime soon, as the company has a lot of growth opportunities to invest in -- namely AI (artificial intelligence) data centers. In fact, the company expects to spend $70 to $72 billion on capital expenditures in 2025 alone, largely driven by investments in AI computing infrastructure.
Big share repurchases
While Meta's dividend yield is low, the company's total shareholder yield has been meaningful when including share repurchases (an indirect way to return capital to shareholders by reducing a company's total share count).
In Q3, Meta returned about $1.3 billion in dividends, and it spent almost $3.2 billion repurchasing its shares. In Q2, Meta spent nearly $10 billion repurchasing its shares.
Rapid business growth
Of course, the best part of Meta's dividend growth story is the company's strong underlying business growth.
Its third-quarter revenue rose 26% year over year to about $51.2 billion -- an acceleration from the 22% year-over-year revenue growth Meta posted in Q2. Fueling its third-quarter growth was a 14% year-over-year increase in ad impressions and 10% growth in average price per ad.
Free cash flow is also worth watching for dividend investors because it reflects how much cash is left after capital spending but before dividend payments and share repurchases. Meta reported about $10.6 billion of free cash flow in Q3.
NASDAQ: META
Key Data Points
An important caveat
With all of this said, it's possible that Meta will put dividend growth on hold temporarily, or at least turn to only modest dividend hikes.
This is because Meta is investing heavily in AI.
"I think that it's the right strategy to aggressively front-load building capacity so that way we're prepared for the most optimistic cases," Meta CEO Mark Zuckerberg said in the company's third-quarter earnings call.
In addition to guiding for $70 billion to $72 billion in 2025 capital expenditures, management said capital expenditures dollar growth is expected to be notably larger in 2026 than in 2025.
That spending could cap how fast the dividend can grow in the near term.
Finally, it's worth noting that while Meta stock isn't necessarily expensive, it's not cheap either. Shares trade at a price-to-earnings ratio of 29 as of this writing. This makes it important that Meta continues growing rapidly -- and that its aggressive investments in AI pay off handsomely.
