Microsoft Corp said on Tuesday it was raising its quarterly dividend for the first time in two years in a move that would return more of the software maker’s nearly US$37 billion cash hoard to its shareholders.
The increase signals Microsoft is feeling more confident that the economy won’t lapse back into recession.
The severity of the last downturn prompted Microsoft to resort to the largest layoffs in its 35-year history, while keeping its dividend unchanged for the longest stretch since it started making the quarterly payments to shareholders in 2004.
The announcement on Tuesday marks the fifth time that Microsoft has raised its dividend.
With the latest increase, investors who own Microsoft stock as of Nov. 18 will get US$0.16 per share. That’s a 23 percent increase from the US$0.13 a share that Microsoft had been paying for the past eight quarters.
The new rate translates into an annual dividend yield of 2.5 percent, based on Microsoft’s current market value. The company’s shares fell US$0.28 to close at US$25.15 on Tuesday before plans for the higher dividend were disclosed, then rose US$0.19 in extended trading.
Microsoft’s increase comes a week after Cisco Systems Inc — another technology heavyweight that’s part of the bellwether Dow Jones Industrial Average — announced plans to pay a stock dividend for the first time.
Separately, Microsoft announced on Tuesday that its Zune digital entertainment service that competes with iTunes would expand internationally with the launch of its next-generation smartphone platform.
Content and services at the online Zune Marketplace will be accessible through personal computers, Xbox 360 videogame consoles and Windows Phone 7 handsets, according to the US-based software giant.
Zune software has been upgraded with new features and synchronized to work with smartphones running on Windows Phone 7 software to be released next month along with a slew of devices running on the platform.
The update will let the new generation of Windows-powered smartphones mesh with the Zune Marketplace to compete with the synergistic pairing of Apple’s iPhone handsets and its iTunes online shop.
The new software will be available by the end of the year in more than 20 countries.
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