Microsoft Shares Jump On Morgan Stanley Price Target Boost; Dividend Increase in Focus

Morgan Stanley analyst Keith Weiss, who carries a new $245 price target on the stock, thinks the tech giant could boost its quarterly dividend by at least 10% later this month.

Microsoft Corp.  (MSFT) - Get Report shares traded higher Wednesday after analysts at Morgan Stanley boosted their price target on the tech giant, citing an expected dividend hike in the coming weeks.

Morgan Stanley analyst Keith Weiss increased his price target on Microsoft by $15, to $245 per share, and maintained his overweight rating heading into what he estimates will be 5 cent dividend increase announced in mid September.

Microsoft's solid fourth quarter earnings, which included a bottom line increase of 13% on better-than-expected revenues of $38 billion, could render the 10% dividend increase forecast conservative, Weiss argues.  

Microsoft said that it will provide forward looking guidance during its conference call discussing its quarterly results later Wednesday. 

Microsoft shares were marked 3.6% higher in early Wednesday trading to change hands at $209.90 each, a move that would extend the stock's year-to-date gain to around 33% and value the Redmond, Washington-based tech group at around $1.6 trillion. 

Microsoft's dividend increase would be a rare move, even for bluechip stocks, heading into the final months of the year, analysts at Janus Henderson noted last month.

Global dividend payouts are likely to fall between 17% and 23% in 2020, Janus estimates, a figure that would hold back some $400 billion in shareholder returns following the economic collapse triggered by the coronavirus pandemic. 

That's the steepest decline since the global financial crisis in 2009, Janus noted, although even in its worst-case scenario, total dividend payments will likely top $1.1 trillion. Microsoft, Nestle and Apple  (AAPL) - Get Report are Janus Henderson's top dividend payers.

Microsoft's last quarterly dividend, a 51 cents per share payout that was approved on June 17, will be paid on Thursday.