Does the Microsoft Dividend Move Presage a Tech-Led Market Rally?
Shares of Microsoft (NASDAQ: MSFT) surged Monday after news leaked that the company will raise debt in order to pay out a dividend to shareholders. While Microsoft does hold $36.8 billion in cash, much of that money is being held overseas and would be subject to repatriation taxes upon using that cash to pay out dividends in the US. The company plans to use its AAA rating in order to raise as much money as possible for the effort. Some estimate they could raise as much as $6 billion. Microsoft is clearly taking advantage of the low interest rate environment and the quest for yield from investors. Why is this significant? This weekend, two themes featured prominently in my reading: first was the idea that younger generations were spurning equities, second was the notion that Tech Stocks had fallen out of favor due to their large cash hoards coupled with diminishing equity returns. Barron’s had two articles dedicated specifically to this issue. The lead tech article from Barron’s stated
