On it’s face a 9-cent dividend sounds pretty weak…

Quite the opposite is true in Microsoft’s case. We need to keep in mind how many shares will receive those 9-cents. So, if you don’t have the number of outstanding shares offhand that’s fine, we’ll do some quick math.

Looking at Google Finance tells me that Microsoft’s market cap is $279.21 billion. ‘Market cap’ means market capitalization… which means ‘how much the company is worth’. Naturally, public company’s worth is based on their stock.

So, since we have Microsoft’s market cap we know that it’s calculated by taking the number of outstanding shares and multiplying it by the stock price.

Market Cap = Number of Shares x Price Per Share

Since we have 2 of the 3 numbers (market cap and price per share) we can essentially solve for the number of shares:

So, Microsoft has over 10 billion shares outstanding. We can then multiply that by our dividend of .09 and we realize that a whopping $900,000,000 will be returned to shareholders. It’s all about how you present these things. Which headline is more captivating:

Microsoft announces 9-cent dividend, or

Microsoft returns nearly $1 billion to investors

As you can see, even a penny from Microsoft is certainly no minor thing. See kids? Accounting can be fun!

PS: Gates holds a little over a billion shares. He’ll be receiving a check for a mere $92,474,940.24.

[tags]accounting, microsoft, dividend, money[/tags]