It's no secret that dividends are all the rage right now. With a stock market that's been essentially flat for 2010, investors want yield, and they can't count on the traditional avenues like CDs or bonds.
That's part of the reason telecom stocks have gotten so much attention this year. Their extraordinarily high yields have the average investor clamoring for a piece of the pie. Rural telecom providers like Windstream
So with the focus shifting from rapid growth to stability and income, there's been inevitable pressure on tech companies to start shelling out dividends, despite the stigma attached to a Silicon Valley giant that starts paying out cash to shareholders.
For starters, semiconductor giant Texas Instruments
So you would think markets would react favorably when Microsoft
That would be an incorrect assumption.
Earlier today, Goldman Sachs analysts cut Microsoft shares from a "buy" rating to "neutral." Among the litany of complaints was uncertainty regarding the sustainability of the Windows/Office franchise (nothing new) and the ability of the tablet wars to eat into PC sales.
The investment banker offered three ways for Microsoft to right its ship, and among them was an even more substantial dividend increase. According to Goldman: "A materially increased dividend beyond the recent 23% increase, moving Microsoft into the top 20 dividend-paying companies in the S&P 500 in terms of dividend yield. We believe this would open the door to a larger investor base and keep the company more diligent from a spending perspective."
Goldman has its eyes set on a 5% dividend yield, and considering that Microsoft's shares have bled 20% so far in 2010, that may not be too much to ask.
What do you think: Should Microsoft saddle up and raise its dividend even more?
Sound off in the comments below or add Microsoft to your watchlist to keep up to date on the company's latest activities.
Jordan DiPietro owns no shares above. Google and Microsoft are Motley Fool Inside Value choices. Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor recommendation. The Fool has written calls (bull call spread) on Cisco Systems. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Google, Microsoft, and Texas Instruments. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.