Microsoft (MSFT) is enhancing its shareholder value with a 10% dividend increase and a new $60 billion stock buyback program. These actions highlight Microsoft’s robust financial results and its optimism about future growth prospects.
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The tech giant has declared a dividend of $0.83 per share, up from $0.75 per share. The new dividend will be payable on December 12, 2024. This marks the second consecutive year of double-digit dividend growth for Microsoft. Additionally, the new share repurchase plan has no expiration date and replaces a similar $60 billion program announced in 2021.
MSFT’s Strong Cash Position Fuels These Plans
Interestingly, the increase in capital deployment plans reflects the company’s ability to generate strong cash flows. As of June 30, MSFT’s cash reserves totaled $75.5 billion. Moreover, it generated a robust $23.3 billion in free cash flow during the fiscal fourth quarter, up 18% year-over-year. This growth came despite the company’s strategic investments in cloud and AI offerings.
Investors should note that Microsoft’s recent success can be attributed to its growing presence in the AI field. By integrating OpenAI’s AI technology into its products like Teams, Word, and Outlook, the company has enhanced its business applications and solidified its position in the AI market.
Though tech companies usually focus on reinvesting for growth, Microsoft’s dividend increases and buybacks show that it can balance shareholder returns with future investments.
Is MSFT a Good Stock to Buy Now?
Turning to Wall Street, MSFT has a Strong Buy consensus rating based on 29 Buys and one Hold assigned in the last three months. At $501.15, the average Microsoft stock price target implies 16.18% upside potential. Shares of the company have gained over 15% year-to-date.
