Microsoft Dividend History: How the Tech Giant Has Boosted Its Payouts

MSFT Dividend data by YCharts .

Watching Microsoft's dividend grow

After that, Microsoft started to grow its dividend gradually over time, following the trend of other stocks in the market, especially technology companies. Since 2006, Microsoft has boosted its payout 10 times, with increases coming annually except in the immediate aftermath of the financial crisis of 2008 and 2009.

The growth rates in Microsoft's dividend have been impressive. After starting off with penny-per-share increases that represented double-digit percentage moves upward, Microsoft accelerated its dividend growth with increases of 18% in 2008, 23% in 2010, and 25% in 2011. The following years showed continuing strength, including raises of 15%, 22%, and 10% in 2012 to 2014. The most recent increase of a nickel per share in 2015 brought the payout to $0.36 per share, representing a 16% rise and bringing Microsoft's yield to 2.8%.

What's ahead for Microsoft's dividend?

Microsoft has plenty of capacity to implement future dividend increases. One recent cause for concern is the fact that its GAAP earnings per share have fallen by roughly half since fiscal 2014. However, most of the hit to Microsoft's bottom line has come from restructuring charges, asset writedowns, and goodwill impairment charges related to its acquisition of phone-related assets from Nokia . When you back out those extraordinary items, Microsoft has typically earned about twice what it's currently paying in dividends. A payout ratio of just over 50% should allow for several more double-digit percentage increases in the dividend in the coming years for Microsoft.

In the long run, much depends on whether Microsoft's growth initiatives are successful. The company has a history of making acquisitions aimed at growth that haven't panned out as well as hoped, and the recent announcement of Microsoft's $26 billion purchase of LinkedIn has left many analysts with an unsettling feeling of deja vu.

However, Microsoft has had promising early results from its drive to move toward a subscription-based model for its software. More than 70 million workers use its Office 365 service monthly, and in particular, consumer subscriptions of more than 22 million point to the popularity of the productivity software suite. Similar initiatives to spur more revenue from Windows, cybersecurity products, and cloud service have shown promise as well.

Microsoft's dividend history isn't all that long, but the stock has gone from being irrelevant to income investors to becoming a lucrative dividend payer. If the company can keep its fundamentals strong, then dividend investors can look forward to more payout increases from Microsoft in the future.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of LinkedIn and Microsoft. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.