Microsoft raised its quarterly dividend as the tech giant balances its massive artificial-intelligence spending with returns to investors.

The company raised its quarterly dividend by 8%, or 7 cents, to 98 cents a share. On an annualized basis, Microsoft’s dividend jumps to $3.92 a share for a yield of 0.78%.

The dividend increase is modestly below the roughly 10% average increase over the prior five years, but remained mostly consistent with Microsoft’s record of steadily growing its dividend alongside earnings.

While there’s nothing breathtaking about Microsoft’s dividend hike, it does illustrate how Microsoft is attempting to juggle massive AI spending with consistent returns to investors.

Microsoft stock declined 0.2% to $496.03 in premarket trading on Wednesday after ending Tuesday down 1.6%.

Microsoft has bet big on its cloud platform, Azure, and its AI assistant tool, CoPilot. The company’s capital spending reached $41 billion in the fiscal fourth quarter and $145 billion for the year. Wall Street thinks investors should brace themselves for heavier AI spending in fiscal 2027.

Microsoft’s move late Tuesday to hike its dividend shows it’s still focused on investors as well.

“We think management views dividends as a permanent commitment,
leaving room for continued share repurchases while balancing elevated AI infrastructure investments,” wrote Morgan Stanley Adam Wood in a research note.