Microsoft Boosts Dividend, Outperforming Price Target Predictions

Microsoft has boosted its quarterly dividend by 8%, marking an increase from its prior quarter. The new payout of $0.98 per share will be made on December 10 to shareholders who own shares as of November 19, which is also the ex-dividend date.

Morgan Stanley analyst Adam Wood noted that this hike is somewhat lower than Microsoft's average dividend raise over the past five years, which stands at around 10%. However, he emphasized that it aligns with the company's long-standing practice of growing its dividend in tandem with earnings growth.

Wood pointed out that combining this dividend growth with Microsoft's projected high-teens earnings per share increase adds up to a strong total return story for the stock. He views this as a supportive factor for a 'durable high-teens total return profile', which he believes presents an attractive risk-reward proposition for investors.

Morgan Stanley rates Microsoft stock as overweight, indicating that they expect it to outperform other stocks in its class. The firm's price target is set at $600 per share, implying 22% upside from the current closing price of $498.