American tech giant Microsoft announced on Tuesday that it would increase its quarterly divided by 22 per cent and launched a $40 billion buyback plan. The twin moves are a continuation of shareholder-friendly moves it had initiated in recent years.

Microsoft hiked its quarterly dividend to 28 cents from 23 cents a share, boosting the company's yearly yield to 3.5 per cent. The last time that the tech giant hiked its divided was in September 2012 when it increased dividends by 15 per cent of 3 cents per share.

It is the eighth increase in dividends by Microsoft that started to declare quarterly dividends in 2004.

The move is expected to cost Microsoft $422 million more per quarter, but it is a small amount compared to the company's $77 billion cash stockpile and its ability to generate cash earnings from $25 billion to $30 billion yearly.

For the new share repurchase plan, it will replace a $40-billion programme initiated in 2008 and would lapse by the end of September 2013.

But while Microsoft shareholder are happy with the boost in their dividends, the company's share price has remained stagnant over the years due to the weaker influence of Microsoft in the tech industry as new mobile devices and Internet services introduced the past few years eroded its influence mainly over the personal computer era.

To counter its diminishing influence, Microsoft launched its own hardware in the form of tablets and smartphones, but both ventures failed to impress consumers and caused losses to the company.

Microsoft is also making a new bid in the smartphone market by buying Finnish phonemaker Nokia for $7.2 billion.

Despite many wrong moves, Microsoft shares went up 21 cents to $33.01, while its stock has increased 24 per cent since January.

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