Dow component Microsoft (NASDAQ:
), the world's largest software maker, added to the dividend craze
in the technology sector with the announcement it is boosting its
quarterly by three cents, or 15 percent, per share to 23 cents a
share. The news, announced Tuesday after the close of U.S. markets,
is merely the latest in what has become a long string of positive
dividend headlines from the Washington-based company.
Microsoft did not start paying a dividend until 2003. The first
payout was eight cents a share per quarter. For the next several
years, dividend growth was lackluster, but by 2007 the company was
paying an annual dividend of 40 cents per share. That figure
doubled by the start of this year and that was before Tuesday's
This is good news for Microsoft shareholders and it continues a
spate of favorable dividend news this year from the technology
that has seen the sector become the biggest
dividend payer in the U.S.
Tech, also the largest sector weight in the S&P 500, has
room to grow dividends further and other companies should follow
the lead of Microsoft, Intel (NASDAQ:
) and others in increasing shareholder rewards.
Here are a few examples:
Oracle, the world's largest maker of enterprise software, pays a
dividend. A piddly 24 cents per share per year, which means the
shares currently yield 0.7 percent. Investors could get a trailing
12-month yield that is more than five times that on the less
volatile iShares iBoxx $ Investment Grade Corporate Bond Fund
Oracle's free cash war chest is expected to rise to $12 billion
Barron's reported in June
. The company has 4.88 billion shares outstanding so even a
doubling of its dividend would not strain Oracle's fortress-like
If Oracle is a dividend offender for having all that cash and
forcing investors to rely on capital appreciation with a puny
payout, then data storage provider EMC is a slap in the face of
income investors. As in EMC pays no dividend at all despite having
$5.65 billion in cash and short-term
as of early August.
EMC does not like giving shareholders money, but it likes to
spend money on M&A. The company has made four acquisitions in
2012, keeping with the firm's acquisitive history. Shareholders may
be saying "What about me?" when it comes to EMC's cash hoard.
Google pays no dividend and one can only guess why the company
does not. Maybe it is because it wants to make more acquisitions.
Maybe it is because it does not want to lose its "growth stock"
feel by paying a dividend, though that argument holds no validity
now that Apple (NASDAQ:
) pays a dividend. Apple has proceeded to touch new all-time highs
in recent weeks months AFTER its dividend announcement.
When Google reported its second-quarter earnings in April, it
$49.3 billion in cash
. Some of that, an albeit small sum, is being squandered on the
Google car that a microscopic percentage of the population can
afford or would even want. None of that cash hoard is going to
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