How Will eBay Fund Its Dividend Program?



eBay initiates quarterly dividend

eBay (EBAY) is planning to pay $0.14 per share in dividends to its shareholders in March, which will mark eBay’s first-ever dividend payment. The dividend program is part of eBay’s capital return program, which previously mostly involved buying back shares from investors. In addition to initiating dividend payments, eBay also expanded its share repurchase program by an additional $4.0 billion.

Combining dividends and share repurchases, eBay intends to return about $5.5 billion to shareholders in 2019. eBay has been funding its capital return program using its cash stockpile. The company generated $2.0 billion in free cash flow in 2018 and exited the year with $8.6 billion in cash. With the dividend and share repurchase programs lined up, eBay projects its cash stockpile will drop to $3.5 billion at the end of 2019.

Article continues below advertisement

Companies line up capital return programs

Alibaba (BABA) and JD.com (JD) are the other e-commerce companies that have lined up substantial capital return programs for their shareholders. Alibaba intends to return $6.0 billion to its shareholders through share repurchases over the next two years, and JD is underway with a share repurchase program to return $1.0 billion to its shareholders over the next one year. Groupon (GRPN) said it returned $10 million to shareholders through share repurchases in 2018. Facebook (FB) in December announced a $9.0 billion boost to its share repurchase program.

eBay made a profit of $763 million in the fourth quarter, which ended in December.


More From Market Realist