Microsoft stock is trying to hit all-time highs after boosting its dividend and initiating a $60 billion buyback. Here's the plan.
Microsoft shares arepushing higher on Wednesday, up about 1% but fading from the highs as the market struggles for traction.
Shares were up almost 2% earlier in the day but have since slipped a bit. That said, the news is still bullish and Microsoft stock is just a hair off its all-time high.
On Tuesday after the close, Microsoft announced an 11% bump to its dividend and approved a new buyback program up to $60 billion.
Of course, that still leaves Microsoft’s dividend yield at a paltry 0.83%, while its $60 billion buyback program will only make a small impact given that its market cap is north of $2.25 trillion.
However, I think investors will find the stock’s one-, three- and five-year gains of 47%, 166% and 437%, respectively, more attractive than a few dividend percentage points.
With shares hovering near the highs, let’s look at the charts.
Trading Microsoft Stock
In August, Microsoft stock ripped higher, giving us a bullish engulfing candle and sending the stock to all-time highs.
Since then though, the stock has struggled on rallies back to $305, with this level acting as resistance.
The recent dip — which came alongside a five-day skid in the Nasdaq Composite — sent Microsoft below the 10-day and 21-day moving averages. However, it didn’t quite make it to the 50-day.
Perhaps it would have without today’s news. In any regard, shares have gapped back above the 10-day and 21-day moving averages, but continue to struggle with the $305 level.
That leaves bulls in a frustrating but clear situation.
On the downside, Microsoft has to hold the $300 level, along with the 10-day and 21-day moving averages. Below puts the recent low in play, near $294.
On the upside, watch $305. A push over $305 and the 161.8% extension is on the table, near $313. Above that and bulls can use an intermediate target of $325, which brings the 261.8% extension into play.
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