Microsoft boosts S&P 500 with 2.5% rise on new $60 billion buyback plan, quarterly dividend hiked by 10%

Microsoft Corp. announced a 10 per cent increase in its quarterly dividend and introduced a new $60 billion stock buyback program, matching the scale of its repurchase plan from three years ago. The company’s shares rose by up to 2.4 per cent following the news.

In a statement late Monday, the tech giant revealed that shareholders as of November 21 will receive a quarterly dividend of 83 cents per share, up from the current 75 cents. The new share repurchase program, which has no expiration date, replaces the $60 billion buyback plan announced in 2021.

Although the figures are substantial in absolute terms, the buyback agreement accounts for less than 2 per cent of Microsoft’s total market value. Shares of the Redmond, Washington-based company have risen by 31 per cent over the past 12 months, bringing its market capitalization to $3.2 trillion as of Monday’s close. Microsoft typically spreads its share repurchases over several years, with approximately $17 billion spent on buybacks in the fiscal year ending in June, according to Bloomberg data.

As of 10:02 a.m. New York time, Microsoft’s shares were up 1.7 per cent at $438.74.

Microsoft’s stock performance

In recent months, Microsoft’s stock has reached new all-time highs, driven by investor optimism about potential gains from its advancements in artificial intelligence.

The company has integrated AI technology from its partner OpenAI into its product suite, promoting the tools’ ability to enhance business applications such as Teams, Word, and Outlook. On Monday, Microsoft also unveiled a new suite of AI tools.

As of June 30, Microsoft held $75.5 billion in cash and equivalents, according to Bloomberg data.

The company reported in July that free cash flow for the fiscal fourth quarter was $23.3 billion, an 18 per cent increase year-over-year, driven by higher capital expenditures to support its cloud and AI services.

(With inputs from Bloomberg)

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