Dell Technologies To Boost Dividend 10% A Year Through 2028

Dell Technologies (DELL), the maker of personal computers, had pledged to increase its dividend payment to stockholders by 10% a year between now and 2028.

Executives at the Texas-based company made the promise at their just completed analyst day held in New York City, where they outlined their earnings forecast and capital returns for shareholders.

Management said that they expect net income to convert to adjusted free cash flow at a rate of 100% or better moving forward.

The company expects to return at least 80% of its free cash flow to shareholders in the form of stock buybacks and dividends, up from a previous commitment to return 50% to 60% of free cash flow.

In addition to steadily increasing its dividend payout to shareholders, Dell also increased its stock buyback program by $5 billion U.S., effective immediately.

Dell currently pays a quarterly dividend of $0.37 U.S. per share, giving it a yield of 2.23%.

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The company also repeated a previous forecast that it would grow revenue in a range of 3% to 4% this year and raised its forecast for long-term profit growth to 8%, up from 6% previously.

Dell executives also said that they see upcoming catalysts for the company’s personal computer business from the emergence of generative artificial-intelligence (AI) software.

With the pandemic-era computer boom having faded, there should be a refresh cycle coming in the laptop market over the next five years, said Dell.

Investment bank Morgan Stanley (MS) maintains a “buy” equivalent rating on Dell stock and has named the company a “Top Pick” with a price target of $89 U.S. per share, implying 35% upside from current levels.

Dell’s stock has risen 93% over the last 12 months and currently trades at $66.41 U.S. per share.