Will Salesforce Ever Pay A Dividend?

A singular focus on quality dividend stocks and income generation can help investors endure the worst economic storms. When times get tough, it’s comforting to know that a dividend check is on the way, in good times or bad.

However, there is a downside which is missing out on fast-growing companies that do not yet pay a dividend. A prime example of this is Salesforce (CRM) which has generated annualized returns north of 20% per annum for the last decade. Salesforce stock has soared to a market cap of $225 billion.

As a result, Salesforce is now a mega-cap stock, defined as those with market caps above $200 billion. The total number of mega cap stocks varies depending upon market conditions, but there are generally 25 to 30 in the US, so there are plenty to choose from for investors.

An investment in Salesforce stock made back in 2010 would now be worth more than 7 times your initial capital. Now that Salesforce is a mega-cap stock and profitable, investors might be wondering whether the company will ever pay a dividend.

Business Overview

Founded in 1999, Salesforce.com Inc. is the world’s #1 customer relationship management platform, and a tool that helps companies stay connected to customers. Salesforce helps over 150,000 businesses run their companies more effectively by enabling them to take advantage of the cloud, mobile, social, internet of things, artificial intelligence, voice, and blockchain to create a 360-degree view of their customers.

Last year the company generated $17.1 billion in sales and earnings-per-share of $0.15. This year Salesforce anticipates $20.7 billion to $20.8 billion in sales and earnings-per-share in the $3.12 to $3.14 range on a reported basis and $3.72 to $3.74 on an adjusted basis. Roughly 94% of the $235 billion market capitalization company’s revenue is derived from subscriptions and support.

Source: Dreamforce 2019, Company Presentation

Salesforce has put together an enviable growth record, having increased its sales from $1.7 billion in fiscal year 2011 to $17 billion in fiscal year 2020, representing an annualized compound growth rate of nearly 30% per annum.

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Harry Goldstein 1 month ago Member's comment

I've often wondered about this myself.