![Page 1: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/1.jpg)
![Page 2: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/2.jpg)
![Page 3: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/3.jpg)
![Page 4: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/4.jpg)
![Page 5: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/5.jpg)
![Page 6: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/6.jpg)
Microsoft Dividend Policy
Dividend is the share of the PROFIT that a company decides to distribute to its shareholders.
While the company pays tax on the distributed dividends, the shareholders can enjoy their dividends TAX-FREE.
![Page 7: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/7.jpg)
Retained earnings ∝
Retention Dividends
cash dividends1__________
Retention Dividends
![Page 8: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/8.jpg)
Cash retained for expansion
Paid in Cash Scrip Dividend (in%), but different from STOCK SPLIT(in fraction)
$3 in 2004
• Bonus/Extra Dividend
• One-off(non recurring distribution)
• To relieve its B/S of HUGE cash balance
![Page 9: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/9.jpg)
Dividend Policy
Traditional Relevance IrRelevance
![Page 10: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/10.jpg)
DIVIDEND YIELD
Dividend Yield= Annual Dividend Per Share/Price Per Share
YIELD CURVETypes Of Yield Curve
Normal Inverted Flat (humped)
![Page 11: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/11.jpg)
Normal
Inverted
Flat
![Page 12: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/12.jpg)
CASE
![Page 13: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/13.jpg)
• Profits are HELD with MSFT
• 1st company in DOW 30
• In 2003 the company declared its FIRST ever dividend for common stock.
• Returns to the shareholders in the form of CASH DIVIDENDS and SHARE REPURCHASES
• In 2010, the company decided to raise a debt of $6bn in order to pay for the dividends and to repurchase shares.
![Page 14: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/14.jpg)
• The financial debt could be raised from 30bp to 87.5 bp(base point) over the treasury bill for 3 to 30 years.
• The company raised the debt despite of cash surplus as it did not want to repatriate the cash which had been invested outside the US as it would have to pay taxes.
• MSFT showed it love for debt and for the share holder it meant a higher dividend rate and for bond holder it meant a safe option to invest.
• MSFT faced the biggest challenge from the software market where they faced the duplicity and piracy of its software.
![Page 15: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/15.jpg)
Current Statistics
Market Price= $36.17
Dividend yield = 3.10%
![Page 16: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/16.jpg)
P/E ratio= 13.40
C:\Users\Sivaditya\Desktop\microsoft\MSFT.htm
EPS $ 0.53 @ 2012
$ 0.63 @ 2013
![Page 17: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/17.jpg)
Recent Dividends
2012 $4466m
2013 $5244m
NET INCOME
![Page 18: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/18.jpg)
REASON OUT
Bird in hand is worth two in the bush
is the company buying back shares ?
Price/Earnings Ratio (P/E)
![Page 19: Microsoft Dividend Policy and Milestones of Microsoft](https://reader033.vdocuments.mx/reader033/viewer/2022061121/546edd75af79597b298b58c2/html5/thumbnails/19.jpg)