Microsoft Hikes Dividend; More Companies Make Payouts


Microsoft ( MSFT ) boosted its quarterly dividend by 22% Tuesday, as a survey showed that more S&P 500 companies are making quarterly payouts to shareholders.

The percentage of S&P 500 companies paying dividends has risen 10 percentage points to 83% since the end of 2009, the highest in 15 years, according to FactSet Research Systems. The increase has been broad-based, from small-cap stocks to large caps.

The dividend payout ratio -- the proportion of net income going to dividends -- has risen for six straight quarters, to 31.8% in Q2. Telecommunications services and utilities companies had the highest payout ratios.

Microsoft, which began paying quarterly dividends in 2004, will raise its payout by 5 cents to 28 cents per share, or $1.12 annually. The dividend will be paid Dec. 12 to shareholders of record Nov. 21, the company said.

The annual dividend yield currently stands at 2.8%, above the S&P 500 average of 2.4%. The S&P's yield has topped 2% for more than two years, as strong dividend growth offset rising stock prices, according to FactSet.

Microsoft's stock has risen 24% this year, outperforming the S&P. But the stock has been volatile recently amid changes at the software giant, including the $7 billion purchase of Nokia's mobile phone business and CEO Steve Ballmer's plans to step down.

Microsoft's Composite Rating is a dismal 52 and its Accumulation/Distribution Rating is a worst-possible E, indicating net selling. Meanwhile, FactSet said analysts see dividends per share rising 9.1% in the next year, led by information technology and financial companies, withCitigroup ( C ) andBank of America ( BAC ) delivering the strongest growth.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: BAC , C , MSFT

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