Microsoft raises dividend 25%

Microsoft is trying to lift its stock price by boosting its dividend by 25%, the largest increase since the world’s largest software maker started the quarterly payments seven years ago.

The change announced on Tuesday will boost Microsoft’s dividend to 20c per share from 16c per share. That topped a 23%, or 3c per share, increase made on the dividend a year ago.

It’s the sixth time Microsoft has raised its dividend since it introduced an 8c payment per share to shareholders in 2004.

The decision to start paying a regular quarterly dividend signalled that Microsoft’s board of directors realised the company’s growth rate by itself would no longer be enough to attract investors. That wasn’t the case during Microsoft’s first 14 years as public company as its Windows operating system and other products became personal computer staples. From Microsoft’s stock market debut in 1986 to the peak of the dot-com boom in early 2000, the company’s shares rose by about 500-fold.

That allowed Microsoft to hold on to its cash instead of using it to entice investors to its stock.


But things have changed. The rise of the internet and the advent of cellphones and computer tablets have made Microsoft’s products look less essential, and given rise to concerns that the company might be heading toward technological obsolescence.

Microsoft has been trying to change that perception by pouring billions into its Bing search engine in an effort to counter Google’s dominance. More recently, it has been focusing on a sweeping overhaul of its Windows operating system so it can run on touch-screen tablets as well as traditional PCs. The redesigned system, Windows 8, is expected to go on sale next year.

In the meantime, Microsoft has been escalating the size of its dividend increases. Despite those actions, Microsoft’s stock performance has been lagging two other technology bellwethers that rank among its biggest rivals.

Microsoft’s stock is stuck at roughly the same level it was five years ago while Google shares have risen 27% and Apple shares have surged to a more than five-fold increase.

Microsoft’s past dividend increases haven’t done much for the company’s stock, according to FBR Capital Markets analyst David Hilal. He found the stock’s gains on the day following the five previous announced dividend increases have never exceeded 2%. In 2005 and 2010, the stock dipped in the first of day of trading after Microsoft announced a dividend increase.

The shares gained 17c — or less than 1% — to $27.15 after Tuesday’s announcement. At that price, Microsoft’s dividend would translate into an annual yield of about 3%.

The new dividend is payable on December 8 to shareholders of record on November 17. — Sapa-AP

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

Advertising

Subscribers only

How smuggled gold destined for Dubai or Singapore has links...

Three Malagasy citizens were apprehended at OR Tambo International airport, but now the trail is found to connect to France and Mali

How lottery execs received dubious payments through a private company

The National Lottery Commission is being investigated by the SIU for alleged corruption and maladministration, including suspicious payments made to senior NLC employees between 2016 and 2017

More top stories

Spy boss tells how agency was used to detain Zuma’s...

Day two of State Security Agency testimony at the Zondo commission birthed more revelations that point to the former head of state and agents breaking the law

Covax will take excess doses of Covid vaccines off the...

The global initiative plans to deliver two billion doses of Covid-19 vaccines to developing nations

Eastern Cape citizens don’t have to visit the labour department...

This measure, aimed at slowing the spread of Covid-19, may shortly be introduced in other regions.

Covid-19 economic crisis will be felt by the poor for...

The pandemic’s economic fallout will affect the world’s poor for years, while the richest billionaires increase their wealth, an Oxfam report notes
Advertising

press releases

Loading latest Press Releases…