Microsoft Corp. announced a new $60 billion stock buyback program and a 10% increase in its quarterly dividend, underscoring its commitment to returning value to shareholders.
The buyback matches the company’s largest-ever repurchase authorization, replacing a previous $60 billion program from 2021.
Starting December 12, shareholders as of November 21 will receive a quarterly dividend of 83 cents per share, up from the current 75 cents. Despite the increase, Microsoft’s dividend yield remains relatively low compared to other Dow Jones Industrial Average components, with the new implied yield rising to 0.77%.
This announcement comes as Microsoft continues to benefit from strong demand for its artificial intelligence (AI) tools, which have been integrated into its core products like Teams, Word, and Outlook. Microsoft has invested heavily in AI infrastructure, contributing to an 18% rise in free cash flow during its fiscal fourth quarter, amounting to $23.3 billion.
While Microsoft’s share price rose slightly after the news, the stock has gained 31% over the past year, reflecting optimism around the company’s AI advancements and cloud services. The company, holding $75.5 billion in cash as of June 30, will continue to balance shareholder returns with investments in AI and cloud infrastructure.
This buyback program ranks among the largest in the US this year, trailing only Apple’s $100 billion and Alphabet’s $70 billion repurchase programs. Microsoft’s latest move highlights the ongoing pressure on big tech firms to demonstrate returns on AI investments, even as growth in some areas, such as its Azure cloud business, temporarily slows.
Microsoft’s next major event will be its annual shareholders meeting on December 10, where more details on its strategic direction, particularly in AI and cloud computing, are expected.
Fortune, Market Watch, Mint contributed to this report.
