Microsoft: $40 billion stock buyback, dividend increase

MSFT Dividend per share since FY05

Microsoft has announced a $40 billion dollar stock buy-back and an increase of 22% to its dividend. This announcement will surely have a positive impact on the relatively stagnant price of Microsoft’s stock and should appease many shareholders, as this will increase the value of the company’s outstanding shares.

The dividend will increase by 5 cents to 28 cents per share and is payable Dec 12, 2013 to shareholders of record on Nov. 21, 2013. The payout was approved by Microsoft’s board of directors and Amy Hood, CFO stated, “These actions reflect a continued commitment to returning cash to our shareholders”.

The quarterly dividend increase is certainly one way to help drive up your stock price but with Microsoft still remaining quiet on Windows 8 sales, the bump we see today could be short-lived if Microsoft falls short with its next earnings release.

In pre-market trading, Microsoft is currently up ~2% on the news and we would expect the figure to climb after the market opens at 9:30AM EST.

Source: Microsoft

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Blue chip companies don't really try to drive up their stock price. That's the game of high risk growth stocks where you can lose and gain double digits quickly. You buy blue chip because you want long term proven stability.