Microsoft (MSFT) investors can expect a juicier dividend payout than usual next month, according to a new Morgan Stanley report.
“Microsoft typically announces a dividend raise in mid-September – for the last eight years the board has announced the raise on the third Tuesday of September,” Morgan Stanley‘s Keith Weiss wrote in a note to clients on Monday. “If this holds true in 2018, the announcement would come on September 18.”
Apple reached a market value of $1 trillion on Thursday, propelled by the sustained success of the iPhone. WSJ’s Spencer Jakab takes a look at how Apple got here. Photo illustration: Heather Seidel/The Wall Street Journal
Weiss sees “a high probability of a larger-than-average increase in the dividend” based on two factors: more than $130 billion in cash freed offshore by recent tax-law changes, and 20% growth in earnings before interest and taxes in the company’s fiscal 2018, which ended June 30.
Microsoft has increased its quarterly dividend by 3 cents to 5 cents since it resumed dividend increases eight years ago, Weiss wrote. The dividend now stands at 42 cents, up from 13 cents in 2010.
He rates Microsoft at Overweight with a $130 price target.
Shares of the software giant are flat, at $110, in Tuesday mid-morning trading. A higher dividend could boost Microsoft shares 2.5% or more, according to Weiss.
Editor’s note: An earlier version of this article incorrectly reported Microsoft’s dividend history. It paid a quarterly dividend of 13 cents in 2010.
Sign up to Review & Preview, a new daily email from Barron’s. Every evening we’ll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.