Microsoft raised dividend by over 10% and authorized $60 billion share buyback program
From Nasdaq: 2024-09-21 04:10:00
Artificial intelligence (AI) tech giant Microsoft (NASDAQ: MSFT) announced a dividend increase of over 10% on Monday, raising the quarterly payout from $0.75 to $0.83, effective for the December dividend. The company also authorized a $60 billion share buyback program, with room for future payout increases due to strong growth and solid cash reserves.
While Microsoft’s dividend hike is significant, the new yield at today’s share price would only be about 0.8%. The company’s impeccable balance sheet, with $75 billion in cash against $50 billion in debt, bodes well for consistent growth. However, the company’s high valuation and AI-related spending may lead to conservative management decisions in the future.
Investors considering Microsoft stock should be aware that the dividend increase may not be enough to attract new buyers seeking immediate payouts, but could benefit longtime shareholders. The company’s growth potential in AI and its track record of past success make it an interesting option for those looking for steady growth with a small dividend kicker.
While Microsoft’s recent dividend hike and share buyback program offer potential benefits for long-term shareholders, new investors may want to wait for a better entry point given the company’s current high valuation and focus on AI-related spending. The company’s growth potential in AI and cloud computing sectors could drive future revenue growth and earnings, making it an intriguing option for patient investors.
Before investing in Microsoft stock, it’s important to consider all factors, including the company’s growth potential, dividend yield, and current valuation. The Motley Fool Stock Advisor analyst team has identified 10 stocks they believe offer significant growth potential, and Microsoft did not make the cut. Investors should carefully research and consider all options before making investment decisions.
Read more at Nasdaq: Microsoft Just Raised Its Dividend By Double Digits: What Investors Need to Know