Let’s find out what has happened to Microsoft’s (MSFT) dividend policy since its 2003 announcement to initiate dividends. We can address this issue by relying on the data that are provided to you in Thomson ONE.

1. To get information about MSFT’s dividend policy, enter its ticker and select OVERVIEW>FULL REPORTS>WORLDSCOPE FULL REPORTS>FULL COMPANY REPORT. Click on STOCK & EARNINGS DATA, and scroll down to the Annual Historical Data section. What has happened to MSFT’s dividend per share, dividend yield, and dividend payout over the past 5 years? Do you have any explanations?
2. Compare this with other firms in the same industry. To see how MSFT stacks up against its peers, select PEERS>OVERVIEWS>PER SHARE DATA to get MSFT’s peers’ last annual dividends. Accessing PEER>OVERVIEWS>ABSOLUTE RANKINGS will give their dividend yields. You can also get this information from the VALUATION COMPARISON in this same section. Has MSFT behaved differently from its peers, or have there been industry-wide shifts?
3. Refer back to the FULL COMPANY REPORT used in Question 1. Manually plot earnings and dividends over time. In the text, we point out that dividends are often much more stable than earnings. Do you see a similar pattern for MSFT?
4. In the Interim Financial Data section of the FULL COMPANY REPORT, identify the dividend declared date, the ex dividend date, and the pay date. Explain the significance of these dates. Go back to Overview and access the Interactive Price Chart. Can you observe price shifts around these dates? Explain what price shifts you might expect to see.
5. Investors are more concerned with future dividends than historical dividends, so go to ESTIMATES and scroll down to the Consensus Estimates section. Click on the Available Measures menu to toggle between earnings per share and dividends per share. What do analysts expect MSFT’s payout policy to be in the future?
6. Refer back to the FULL COMPANY REPORT, and scroll down to the 5 Yr Annual Balance Sheet section. Does it appear that MSFT has been repurchasing any stock, or has it been issuing new stock?