REDMOND, Washington (

TheStreet

) --

Microsoft

(MSFT) - Get Report

raised its quarterly dividend 23% and said its board authorized it to issue up to $6 billion in additional debt.

Microsoft raised the dividend to 16 cents a share from 13 cents, the first time the software maker has raised the dividend in two years.

Based on Microsoft's current market value, the new dividend rate translates into an annual dividend yield of 2.5%.

"This higher dividend, combined with our ongoing share repurchase program, reflects our commitment to returning capital to our shareholders and our confidence in the long-term growth of the company," said Peter Klein, Microsoft chief financial officer, in a statement late Tuesday.

Microsoft distributed $4.6 billion in dividends during its last fiscal year which ended in June, according to the

Associated Press

.

Microsoft is planning to sell debt this year to pay for dividends and share repurchases because much of its cash is held overseas, a person familiar with the matter told

Bloomberg

last week.

Microsoft shares closed at $25.15 Tuesday. They rose 19 cents in after-hours trading.

-- Written by Joseph Woelfel

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