Steve Ballmer, the sixth richest person globally, stands out with an expected dividend income of nearly $1 billion from Microsoft in 2024. This staggering sum illustrates the scale of wealth among the world's richest individuals and the significant financial benefits of holding large stock portfolios.
Microsoft's Dividend Payout and Ballmer's Windfall
Steve Ballmer, the former CEO of Microsoft, is set to receive this massive dividend due to the tech giant's decision to increase its quarterly dividend payout to 75 cents a share, totaling $3 a share annually.
With Ballmer owning 333.2 million shares of Microsoft, as per his last ownership disclosure in 2014, this dividend will almost reach the $1 billion mark in the fiscal year 2024. This income is generated purely from owning the stock and is independent of the stock's market performance.
The likelihood of Microsoft slashing dividends seems slim, considering the company’s history of consistently increasing dividend payouts since it began distributing them to shareholders in 2003. Ballmer's anticipated dividend income highlights the substantial returns that can be achieved through strategic long-term investments in successful corporations.
Tax Implications and Broader Context
With such immense income, Ballmer is set to contribute a substantial amount in taxes. Based on his reported income of $656 million to the Internal Revenue Service in 2018, as revealed by ProPublica, he will likely fall into the category subject to a 20% tax on dividends.
This tax bracket applies to individuals earning a taxable income of $500,000 a year or more, meaning Ballmer could pay close to $200 million in taxes on his Microsoft dividends. Ballmer’s case is not unique among the ultra-wealthy.
Warren Buffett’s Berkshire Hathaway, for example, is expected to collect $6 billion in dividends this year, as reported by the Wall Street Journal. The conglomerate's investment portfolio includes dividend-paying stocks such as Chevron, Bank of America, Apple, Coca-Cola, Kraft Heinz, and American Express.
These examples of immense passive income from dividends among the wealthiest individuals spotlight the significant financial advantages of large-scale stock ownership.