Microsoft Boosts Dividend By 22 Percent, Renews $40B Shares Buyback

The board of directors of Microsoft Corporation (NASDAQ:MSFT) approved a 22% increase to the quarterly dividend of the company to $0.28 per share. The board also renewed the $40 billion shares repurchase program of the company, which is set to expire by the end of the month.

According to Microsoft, all shareholders on record as of November 21 will receive the new dividend on December 12. The new shares repurchase program has no expiration date.

In a statement, Amy Hood, chief financial officer of Microsoft said, “These actions reflect a continued commitment to returning cash to our shareholders.”

Microsoft’s stock slightly went up to $32.93 per share after hours on Tuesday following the announcement of the dividend increase and shares buyback. The stock is close to reaching its highest price of $36.43 a share on July 16. The shares of the company fell to its lowest level at $26.26 a share over the past 52-week range.

Data from FactSet showed that Microsoft has 8.33 billion outstanding shares. The company will return additional $416 million capital to shareholders with its new dividend every quarter.

Microsoft’s expansion of cash return to shareholders is highly anticipated because of the involvement of Value Act Capital. The board entered a cooperation agreement and agreed to offer a board seat to the activist hedge fund. Value Act’s president, Mason Morfit will regularly engage in discussions with Microsoft regarding important business issues, and the hedge fund has the option to appoint him as member of the board of the soft giant.

The software giant also entered an agreement with Nokia Corporation (ADR) (NYSE:NOK) to acquire the Devices and Services business including the Asha and Lumia smartphone brands for $7.2 billion.

According to Jefferies managing director Peter Misek, Microsoft has no choice but to acquire the Devices & Services unit of the Finnish smartphone manufacturer to increase its presence in the mobile market primarily to maintain the growth of its Windows franchise.

Microsoft’s CEO Steve Ballmer said the acquisition of Nokia’s Devices and Services business is a “bold step into the future- a win-win for employees, shareholders and consumers of both companies.” Ballmer will retire from his position over the next 12 months.

There had been speculations that Alan Mulally, CEO of Ford Motor Company (NYSE:F) will likely succeed Ballmer, and he is considering to leave his position at the carmaker earlier than planned. Mulally denied the rumors and emphasized that he is “absolutely focused on serving Ford.”