Morgan Stanley (NYSE:MS) analyst Keith Weiss expects Microsoft (NASDAQ:MSFT) to give a bigger-than-usual dividend payout on its next announcement, to come around Sept. 18.
“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,” Weiss wrote in a note to clients on Monday. “If this holds true in 2018, the announcement would come on September 18.”
Microsoft has increased its quarterly dividend by 3 cents to 5 cents since it resumed dividend increases in 2010. The increase has resulted in the company’s quarterly dividend climbing from $0.13 to $0.42. The company currently has forward dividend & yield of $1.68 and 1.55%, respectively.
The analyst said he sees a high probability of a dividend hike of more than 20% based on a number of factors, including more than $130 billion in cash freed offshore by recent tax-law changes, and recent strong revenue growth and operating income growth in the company’s fiscal 2018, which ended June 30.
It is worth noting that since 2013 the Redmond, WA-based company has averaged annualized dividend growth of 13%.
Weiss said he maintains his ‘Overweight’ rating and $130 price target on Microsoft shares.
Mıcrosoft’s stock was down 0.15% to $111.85 in Thursday’s pre-market session. The name was up more than 50% year-over-year through Wednesday versus the S&P 500’s 18.4% gain.