Experimental feature

Listen to this article

Experimental feature

Microsoft continued to chip away at its swelling cash reserves, announcing a dividend increase that will add some $425m to its annual cash distribution to shareholders.

The higher payment, announced late on Wednesday, marks the second time the software company has lifted the regular quarterly pay-out since it introduced the dividend two years ago.

However, at 1.3 per cent, it still leaves the yield below the level of most other
dividend-paying US companies, and is in line with the lower cash distributions made by other technology companies. The news, which will increase the quarterly payment to shareholders from 8 cents a share to 9 cents, follows the company’s promise two months ago to accelerate a $30bn stock buy-back plan.

The repurchases would be completed a year earlier, by the end of 2006, the company said.

Coming on top of a special one-time dividend of $32bn to shareholders, the payments have eaten into the mountain of cash generated by Microsoft’s desktop software dominance. With cash and investments still amounting to more than $50bn at the end of September, that has not stopped the prodding from Wall Street for the company to take further action.

Including cash used to buy back stock, Microsoft’s total distributions to shareholders currently give its stock a yield of 6.5 per cent, according to Charles Di Bona, software analyst at Sanford C Bernstein. However, that is unlikely to attract income-oriented investors.

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article