Microsoft Pays Out More in Dividends Than It Spends Buying Back Stock. Here's What That Does for Investors.

Microsoft has shifted its capital allocation strategy, now prioritizing dividends over stock buybacks. In fiscal 2026, the company paid $27.0 billion in dividends versus $16.7 billion in buybacks, a reversal from five years prior. The buyback program primarily offsets dilution from employee stock compensation rather than reducing share count, with minimal impact on earnings per share growth, which has been driven almost entirely by business profitability rather than share reduction.