Microsoft Wants to Give More Back


There's one thing investors can count on with Microsoft (NAS: MSFT) : It gives back to shareholders. The software giant has just declared its next quarterly dividend and is actually boosting it by 15% to $0.23 per share. That may all sound fine and dandy, but that increase actually represents smaller dividend growth than in prior years.

Microsoft paid quarterly dividends of $0.13 per share in fiscal 2010, and raised that 23% to $0.16 in fiscal 2011. The next fiscal year, Mr. Softy would bump that quarterly payout by 25% to $0.20. Of course, I wouldn't expect Microsoft to be overly generous with handouts after reporting its first quarterly loss as a public company thanks to a whopping $6.2 billion goodwill impairment related to the failed acquisition of aQuantive. In a way, that purchase itself could be considered a generous handout... to aQuantive shareholders, who enjoyed an 85% premium when Microsoft bought the company.

The new dividend puts Microsoft's yield near 2.9%, which still lags Intel's (NAS: INTC) 3.9% yield, a favorite among dividend tech investors. Fellow tech blue chip IBM (NYS: IBM) pays out just a 1.6% yield, and longtime rival Apple (NAS: AAPL) just paid out its first dividend in 17 years, which comes in at around a 1.5% annualized yield.

On the other hand, Microsoft does boast a higher payout ratio than its peers, paying out nearly 40% of earnings over the past year (before the increase). Intel has just a 34% payout ratio, while IBM's looks stingy in comparison at just 22%. Technically, Apple's payout ratio is just 6%, but that's only because the iPhone maker has only paid one quarterly dividend in the past year.

Microsoft also announced that Raymond Gilmartin is stepping down from the board after serving since 2001. Gilmartin will retire and not seek re-election at the company's 2012 annual meeting. That leaves 10 remaining board members.

The good news for investors is that Microsoft's dividend is relatively safe thanks to its biggest cash cows, which you can read all about right here in this premium research report. Grab your copy today and get additional regular updates at no additional cost.

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Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple, Intel, and Microsoft. Motley Fool newsletter services have recommended creating a synthetic long position in International Business Machines, a synthetic covered call position in Microsoft, and a bull call spread position in Apple. The Motley Fool has a disclosure policy.
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