Microsoft’s Dividend is Small but Secure, with a Payout Ratio of 24%

Microsoft returned more than $37 billion to shareholders in fiscal 2025 through dividends and buybacks, while continuing to invest heavily in artificial intelligence (AI) and cloud technologies, Reuters reported.

Microsoft's dividends are funded by robust free cash flow.

The tech giant is not a high-yield dividend stock; its yield remains well below 1%. But dividend strength is not defined by yield alone. Staying power, disciplined capital allocation, and the ability to raise payouts consistently are equally important.

Those qualities help explain why Microsoft remains a favorite among dividend investors.

The company combines predictable recurring revenue with steady earnings growth and a conservative payout ratio of 24%. Its dividends are funded by robust free cash flow, even as it channels billions into growth areas such as AI and cloud infrastructure.