9/15/2015 Microsoft (MSFT) has announce a dividend increase of $0.05 per share to the new quarterly amount of $0.36 per share payable on December 10th to shareholders of record November 19, 2015. The new quarterly dividend reflects a 16.12% increase over the previous dividend of $0.31 per share, $0.02 higher than my expectations, and an increase far outpacing inflation. The new dividend equates to a dividend yield of 3.27% based on today’s closing price of $43.98. Microsoft has been paying a dividend since 2003, with increases going back to 2010, and sporadic increases dating back from 2003. They have a ways to go in order to hit aristocrat status, but if cash is king then MSFT has a crap ton of cash to deploy and nice free cash flows, so their dividend has room to grow going forward.
It will be interesting to watch the upcoming fiscal year for MSFT, as the previous years earning were a little disappointing. Payout ratio is definitely increasing compared to the previous fiscal year earnings. The $350 billion behemoth has some pretty big numbers to go up against for next year. They are being attacked on all fronts from several companies across all of their business lines, the PC market is shrinking, we’ll see how companies decide to adopt Windows 10, and the company struggles to find it’s footing in mobile, meanwhile cloud and subscription services are the shining star in the company, and the Xbox line is performing admirably yet still a small part of the overall revenues.
The software giants best growth days are well behind it, but as far as a value play, things still look good. The guys in Redmond are down, but not out. Satya Nadella seems to have a better plan for the company compared to Ballmer, and has already shown the balls to cut bad investments from previous leadership and move forward.
BAMFmoney.com loves dividends as a form of income to live off of in early retirement and a company that is able to grow that dividend is all the better to hedge against inflation. Thanks Microsoft for the pay increase.
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