Megacap dividend stock may make sweeping layoffs to offset AI costs

Big tech is about to get leaner. And for Meta Platforms, the possible job cuts could be historic.Three sources told Reuters that Meta (META) is planning layoffs, which could affect 20% or more of its workforce, according to CNBC. If that number holds, it would be the company's largest round of job cuts since its 2022 restructuring. Back then, Meta let go of roughly 21,000 workers across two rounds of cuts, according to Reuters.Meta spokesperson Andy Stone called the news "speculative reporting about theoretical approaches." But the backdrop driving these conversations is anything but theoretical.The potential layoffs should enable Meta to consistently raise its annual dividend amid near-term increases in capital expenditures. Meta makes a massive AI betMeta has committed to spending $600 billion building out data centers through 2028, per CNBC. And Meta’s capital expenditures could surpass $700 billion through 2030, data from Tikr.com suggest. The social media heavyweight is also investing heavily in acquisitions to widen its AI moat and onboard top-tier talent. Meta is spending $2 billion to acquire Manus, a China-based AI start-up, The Wall Street Journal reports. Notably, it has also offered $300 million over four years to attract AI talent for the Superintelligence lab, according to Wired. That kind of spending requires a trade-off somewhere.At the Morgan Stanley Technology, Media & Telecom Conference on March 4, Meta CFO Susan Li explained the thinking behind the company's aggressive infrastructure push.She pointed to AI-powered tools that are already making Meta's developers significantly more productive.Li cited an internal figure of 80% gains in coding productivity. The idea is that a smaller, more AI-equipped team can accomplish more than a larger one without the tools. Meta has a sustainable dividend payout ratio.Chris Unger / Getty Images Is Meta’s dividend safe?Despite cost pressures, Meta's financial profile remains strong, even as free cash flow growth slows. Between 2020 and 2024, Meta grew its free cash flow from $23.63 billion to $52.10 billion, indicating a compounded annual growth rate of over 21%. The AI race and heavy capital expenditures led to a 16% decline in FCF to $43.6 billion in 2025. Analysts expect FCF to fall by another 75% to $10.74 billion this year. However, analysts estimate FCF to surpass $119 billion in 2030 as AI spending normalizes. Meta pays a quarterly dividend of $0.525 per share, and its annual dividend expense is roughly $5.3 billion, indicating a payout ratio of almost 50% in 2026. Analysts forecast the annual dividend to increase to $3.81 per share by 2030. Key dividend and valuation metrics for Meta stockAnnual dividend per share (2025 actual): $2.10Estimated dividend per share (2026): $2.25 (year-over-year growth of 7.1%)Estimated dividend per share (2030): $3.81 (CAGR of 12.6% through 2030)Free cash flow (2025 actual): $43.59 billionEstimated free cash flow (2026): $10.74 billion (down 75.4% year over year as capex peaks)Estimated payout ratio (2026): 50% of FCFMeta stock dividend yield: 0.36%The dip in free cash flow through 2026 reflects Meta's heavy investment in AI. But analysts project a strong recovery beginning in 2027, with free cash flow nearly tripling by the end of the decade.That recovery, if it materializes, would give Meta plenty of room to grow its dividend while continuing to fund AI initiatives.What's next for Meta stockLi acknowledged at the Morgan Stanley conference that Meta has been "playing catch-up" on infrastructure capacity, and that much of what is being built today will not come online until 2027 or later.Still, she was measured in her optimism about Meta AI, which she noted already has more than one billion users, despite not yet running on a state-of-the-art foundation model.More Dividend Stocks:Down 63 percent, Warren Buffett dividend stock signals opportunity114-year-old defense stock offers a $3 billion dividend payout in 2026This megacap AI stock pays over $12 billion in annual dividends"When we have a frontier model," Li said, "I feel quite confident that the combination of that, the distribution graph, and the network effects" will position Meta AI as a serious competitor.Down 22% from all-time highs, Meta stock trades at a forward price-to-earnings multiple of 20x. At the current multiple, the megacap dividend stock could surge $1,100 over the next five years, 80% above the current price. Out of the 44 analysts covering Meta stock, 39 recommend “buy” and five recommend “hold.” The average Meta stock price target is $859, 40% above the current price. For dividend investors, the story here is straightforward. Meta is spending heavily now to set up for what it believes will be a much larger and more profitable business by the end of the decade. Whether the layoffs materialize as reported and whether the AI investments pay off will be the defining questions for META stock in the years ahead.Related: Bank of America resets Meta stock forecast on deal with AMD