Tech giant Microsoft has announced a new $60bn share buyback programme and hiked its quarterly dividend by 10 per cent.
This new shareholder cash return replaces Microsoft’s previous $60bn programme, which was launched in 2021, and has no set expiration date.
According to data from Birinyi Associates, the cash return is the third-largest repurchase scheme launched by US companies this year.
Only Apple, with a $100bn (£76bn) buyback, and Alphabet Inc., with $70bn (£53bn), have announced larger programmes. Nvidia and Meta announced $50bn (£38bn) buybacks this year.
Following the dividend increase, shareholders will receive 83 cents per share, up from 75 cents as of November 21.
However, Microsoft will still rank among the lowest-yielding stocks on the Dow Jones Industrial Average.
Its dividend forward dividend yield now stands at 0.15%.
Microsoft, currently valued at $3.2t (£2.4t), remains the world’s second-largest company behind Apple, which holds a valuation just south of $3.3t (£2.5t).
However, the timing of the buyback may raise eyebrows, given that Microsoft, like other tech firms, has often prioritised growth investments over high dividend payouts and has been investing heavily in AI.
The tech giant’s shares edged up 0.7 per cent in after-hours trading, following a 0.2 per cent gain during regular trading. The stock has climbed over 16 per cent so far this year.
Apple, however, fell 2.8 per cent after a high-profile analyst report suggested that demand for the new iPhone 16 has been lower than expected and is down 15 per cent compared to the iPhone 15 launch.
“There may also be some hesitation among customers to stump up at least $799 for a new handset, before its key selling point Apple Intelligence begins its roll out next month,” said Derren Nathan, head of equity research, Hargreaves Lansdown, “but the early sluggishness does add pressure for the integration of AI to spark renewed interest,” he added.
Meanwhile, Chipmaker Nvidia dropped two per cent, although shares are still eight per cent ahead of last week. Its embattled rival Intel jumped over six per cent as the US Government said it is injecting $3bn into its collaboration with Amazon Web Services (AWS) on chips for the US military.
“But perhaps the bigger boon for beleaguered shareholders was a memo to employees revealing plans to spin off its heavily loss-making division,” said Nathan.
It comes as the Fed is expected to cut rates this week.