Microsoft edges up as it authorizes $40 billion of buybacks and raises dividend

Key Points
  • Microsoft last raised its dividend a year ago.
  • The company bought back $19.54 billion in shares last year.
Microsoft CEO Satya Nadella speaks at a fireside chat with the CEO of German carmaker Volkswagen (unseen) where they unveiled their cooperation for the Volkswagen Automotive Cloud in Berlin on February 27, 2019.
Tobias Schwarz | AFP | Getty Images

Microsoft shares ticked up 1% in extended trading on Wednesday after the company said it has authorized another $40 billion for share buybacks and will raise its quarterly dividend by 5 cents to 51 cents a share.

The company has routinely bought back shares of its stock under CEO Satya Nadella, and in the fiscal year that ended on June 30 the company bought back $19.54 billion worth of its shares. In the previous fiscal year, the buybacks came out to $10.72 billion. During Nadella's tenure over the past five and a half years, Microsoft stock has risen almost quadrupled and eclipsed a trillion-dollar market cap.

Microsoft raises dividend by 11%, announces $40B buyback: Josh Lipton

Microsoft paid its first dividend to shareholders in 2003, and it has generally bumped up its quarterly dividend every year or so. The company announced the increase of the dividend by 4 cents per share, to 46 cents, one year ago.

The new 51-cent dividend is 2 cents above the consensus estimate among three analysts polled by FactSet.

The dividend is payable on December 12 for shareholders of record as of November 21, Microsoft said. When it kicks in, the new dividend will be almost double what it was when Nadella took over from Steve Ballmer. At Microsoft's closing price of $138.52, the dividend yield would be 1.47%, below the 1.93% yield for the S&P 500, according to FactSet.

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