Investing.com – Microsoft stock (NASDAQ:MSFT) traded 1.5% higher Wednesday as the company announced a $60 billion share buyback and a higher quarterly dividend.
The new share repurchase program, which has no expiration date, may be terminated at any time, the $2.25 trillion company said.
Microsoft’s cash, cash equivalent and short-term investments amounted to $130.33 billion as on June 30, enough to fund the current buyback twice over.
Buybacks help in boosting the share price since they reduce the float, thereby raising the earnings per share. Companies resort to buybacks either when a company doesn’t think the share price truly reflects the value of the company, or when the company is flush with cash and doesn’t have other uses for it.
The company’s Board also declared a quarterly dividend of 62 cents, 6 cents or 11% more than the previous three-month dividend. The ex-dividend date is November 17.