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Microsoft Placates Shareholders With Another Dividend Hike

MSFT dividend juiced by 22%; new buyback program approved


In the midst of what’s been an eventful few months, Microsoft (MSFT) stepped up and cheered investors with news of a double-digit dividend hike and a stock buyback program.

The first payout comes to 28 cents per share — payable Dec. 12 to shareholders of record Nov. 21, with an ex-dividend date of Nov. 19 — and bumps MSFT’s dividend yield to 2.8%. Microsoft also announced the approval of a new share repurchase program of $40 billion, replacing its current program, which is set to expire at the end of the month.

While MSFT is trading only fractionally higher on the news, that’s better than reactions to many of its other headlines during the past six months:

  • In early July the company announced a massive restructuring, aimed at reinventing itself as a “services and devices” company. The news was met with a big market shrug and some skepticism.
  • The company also shocked analysts and investors in announcing a $900 million write-off of Surface RT inventory, cratering fourth-quarter earnings and crushing the stock, with a one-day 11% drop on July 18.
  • The ugly headlines finally helped push out CEO Steve Ballmer, who announced in August he would retire from the company within one year’s time.
  • Earlier this month, MSFT announced a $7.2 billion purchase of Nokia’s (NOK) cellphone business and licenses, which was met in a selloff of MSFT.

Perhaps the only consistency from Microsoft is the dividend. It has been raised annually since 2003, improving 250% overall in that time. Meanwhile, MSFT sports $75 billion in cash and reported $29 billion in operating cash flow in 2013.

Income investors should be plenty pleased with this move, at the very least. However, they and the rest of MSFT’s shareholders are probably still holding out for better headlines ahead.

Marc Bastow is an Assistant Editor at As of this writing, he was long MSFT

Article printed from InvestorPlace Media,

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