Behind Microsoft’s Rising Dividends
Microsoft raises dividend, changes board members
Microsoft (MSFT), on Tuesday, September 19, declared a dividend of $0.42 per share, which represents a 7.6% hike from its previous dividend. The dividend is payable on December 14, 2017, and the ex-dividend date is November 15. The company’s dividend yield now stands at 2.2%, based on Tuesday’s closing price.
The company has also made some changes to its board. Hugh Johnston, Pepsi’s (PEP) CFO (chief financial officer) and vice chairman, will join Microsoft’s board and the audit committee. Johnston has been Pepsi’s CFO since 2010 and will step down from Twitter’s (TWTR) board on October 1, 2017.
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Microsoft’s share buybacks
As the graph above shows, Microsoft’s dividends were negligible after the dotcom bubble, after which the company’s revenue growth slowed down. The company saw stellar revenue growth in the 1990’s as Windows prospered with computers, and the company has constantly increased its dividends since then. The company’s revenues rose 13% last quarter, thanks to its fast-growing cloud business.
Over the past three fiscal years, Microsoft has spent a whopping ~$38 billion on share buybacks and close to $33 billion in dividends paid. Microsoft earned roughly $50 billion in net income during that period, and the stock has risen ~20% so far in 2017.