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Has Alphabet Stock Become a Great Passive Income Pick?

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the alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) recently announced its quarterly results (April 25). What has investors excited is the dividend of $0.20 per share, which provides a passive income opportunity for them. Shares rose 14.6 percent after the announcement. So, let’s see if this is confirmed.

Is this a great opportunity to generate second income?

Profit is initially set for $0.20. On an annual basis it would be $0.80 (although, we should keep in mind that the profit is not guaranteed). The dividend yield based on the current share price of $167.18 would therefore be 0.48%.

To generate an extra $100 a month, I would need to buy 1,500 shares of Alphabet, which cost $250,770.

That’s a lot of money to get an extra $100 a month. Is it really worth it? I would say no.

If I’m investing in a company for its dividend, I usually have a rule of thumb to only look for companies with at least a 3% dividend yield. For example, I own Abv The shares currently pay $6.20 on an annualized basis, giving me a yield of 3.88%. To get the same $100 a month, I would have to spend only $31,082.68 on his 194 shares. This is a very inexpensive way to earn extra income.

However, while Amazon is not my ideal stock to buy for passive income purposes, there are other reasons to consider buying its stock.

An impressive company

The rest of his results for the quarter impressed me even more.

Growth remains strong as sales rose 15% year-on-year to $80.5bn and net income rose 57% to $23.7bn.

Moreover, it continues to dominate the business. Google is by far the most used search engine worldwide, with a market share of 91%. YouTube has 2.49 billion monthly users. Google Cloud is also growing very well, with sales up from $7.5bn last year to $9.6bn.

Having said that, the company faces significant competitive threats. AI is an opportunity, but Alphabet faces stiff competition from others such as Microsoft. For example, Microsoft’s investment in ChatGPT maker OpenAI could hurt Alphabet’s main source of revenue, Google.

Although the firm responded with its chatbot, Gemini, it was still relatively slow to release and ChatGPT has a first-mover advantage.

Now what?

Alphabet has achieved great things as a business, but it needs to ensure it remains competitive, especially as it operates in industries that are undergoing major change with the emergence of AI. are, and the competition is only going to intensify.

However, with $108bn of cash and equivalents on its balance sheet, it has more than enough to continue investing in innovative projects. Most of the competitors just can’t compete with Alphabet Treasures.

In conclusion, while this is not my favorite stock for passive income, I think now may be a good time for investors to consider adding this stock to their portfolio. Its forward price-to-earnings (P/E) ratio of 25.5 may seem a bit expensive, but it’s still cheaper than many tech rivals in the US. gave Nasdaq 100 That compares with a P/E of 29.6.

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