For those long-time investors in Microsoft and the MSFT stock, they got a surprise announcement on Tuesday. The Microsoft board approved a 22 percent increase in the company’s quarterly divided and along with that an adventurous stock buyback program.
The decision by the board is aimed to control the amount of MSFT stock on the market today, while at the same time gives investors a return on their investment. The plan is made to give cash back to its shareholders and should help the stock overall.
Dividend Paid Dec 12, 2013
On it’s investor site, Microsoft announced that the dividend, which is a 5 cent dividend increase, will be paid to investors on December 12th, for those investors on record as of November 21st, 2013. The dividend will be costing Microsoft an estimated $416 million per quarter, but is aimed to give back to its investors.
Stock Buyback Program
In addition to the dividend increase, Microsoft’s board announced a $40 billion stock buyback program. While this replaces the current stock buyback program that was set to expire later this month, is aimed to return equity back to Microsoft via this move, and help with the costs associated with the upcoming Nokia buyout.
Comments From Microsoft Mixed
The overall comments from Microsoft were relatively positive and left investors mixed. Microsoft’s position is that they are returning cash to the shareholders, but investors saw the stock with a ton of movement on Tuesday. The MSFT stock closed up +0.13 or 0.39% percent higher with an estimated 84 million shares trading hands. With Steve Ballmer’s retirement and the Nokia purchase, the stock has gone up and down lately, and Microsoft’s comments to remain positive puzzle some longtime investors.
The company made a bold move on Tuesday to give money back to its investors via this dividend increase, but quietly moved to ring in more shares to its own company. By doing this, Microsoft can sweeten the pot for investors with a promise of money, but make the outstanding shares of the company lessen with the buyback program. Microsoft certainly isn’t short on cash and with a Nokia purchase, new CEO, Windows 8.1 launch, and the Xbox One makes a lot in play for MSFT on the market.