Microsoft announced a $40 billion stock buyback on Tuesday, as well as a 22 percent dividend increase.
(Read more: Microsoft and the dividend )
Ahead of the company's meeting with financial analysts on Thursday, the board approved the new stock repurchase program to replace the previous buyback program, which was set to expire at the end of this month. The new share repurchase program has no expiration date.
(Read more: Pros say Microsoft investors may want to reconsider )
The quarterly dividend was increased to $0.28 per share, which is a five cent increase over the previous quarter. The dividend will be payable to shareholders on December 12 and is applicable to all shareholder of record on Nov. 21, 2013.
Microsoft, which is known for its shareholder-friendly ways, has been paying a regular quarterly dividend since 2004. The company's last dividend increase was payable last September and was an increase of three cents, making the total dividend amount $0.23.
(Read more: Cramer: 'It's time to break up Microsoft' )
Still though, the company's share buyback plan comes at a time when Microsoft is undergoing some major changes.
The company announced earlier this Summer that it would be launching a major reorganization, which would shift the company's focus to tablets and smartphones. Then last month, Microsoft announced its long-time CEO Steve Ballmer would be leaving the company during the next 12 months.
(Read more: Microsoft's next CEO isn't who you think )
And then earlier this month, the company shocked many investors and analysts when it announced it was purchasing Nokia's mobile business for $7 billion in an attempt to compete with other smartphone makers like Samsung and Apple.
( Read more: Microsoft and Nokia are both dumb about smartphones )
The tech giant's stock price was up on the news.
Click here for the latest on the markets.