In a move to bolster shareholder value, Microsoft Corporation has announced a 10% increase in its quarterly dividend and a substantial $60 billion stock repurchase plan. The software giant revealed that it will hike the dividend from 75 cents per share to 83 cents per share for shareholders as of November 21, 2024.
The dividend payment is scheduled for December 12, 2024, and the ex-dividend date will be November 21, 2024. The board of directors has also authorized a stock repurchase program of up to $60 billion, with no expiration date for the agreement.
As the second-largest company by market capitalization globally, Microsoft has benefited from the surge in market enthusiasm for artificial intelligence (AI). The software manufacturer has infused the AI technology from its partner, OpenAI, into its product line, asserting that these tools can enhance its commercial applications, such as Teams, Word, and Outlook. Microsoft released a series of new AI tools earlier on Monday.
According to the latest data, as of June 30, Microsoft held $75.5 billion in cash and equivalents. The company reported in July that its free cash flow for the fourth fiscal quarter was $23.3 billion, an 18% increase year-over-year and reflecting increased capital expenditures on cloud and AI products.
The announcement of the stock repurchase plan followed by a rise in the company’s stock price in the regular trading session on Monday, closing at $431.34. The stock then rose slightly in after-hours trading. Over the past year, the stock has surged by 31%.
Microsoft’s decision to increase the dividend and initiate a significant stock repurchase program comes as the company continues to capitalize on the AI boom. By integrating OpenAI’s AI technology into its products, Microsoft aims to strengthen its position in the AI market and enhance its competitive edge.
The $60 billion stock repurchase plan is substantial and reflects the company’s confidence in its future prospects. By buying back shares, Microsoft is effectively reducing the number of outstanding shares, which can boost earnings per share (EPS) and increase shareholder value.
Moreover, the increased dividend payout is a testament to Microsoft’s strong financial performance and cash flow generation. With a robust balance sheet and a solid business model, the company is well-positioned to reward its shareholders.
As the AI market continues to grow, Microsoft’s investment in this area is expected to pay dividends in the long run. The company’s new AI tools are designed to improve productivity and collaboration, making them valuable assets for businesses worldwide.
In conclusion, Microsoft’s decision to raise its dividend and initiate a massive stock repurchase program demonstrates the company’s commitment to enhancing shareholder value. With a strong focus on AI and a robust financial position, Microsoft is well on its way to achieving sustainable growth and success in the years to come.
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