Dell to start paying dividends

@CNNMoneyTech June 12, 2012: 6:09 PM ET

NEW YORK (CNNMoney) -- Computer maker Dell said Tuesday that it will start paying dividends to shareholders later this year.

The news pushed Dell (DELL, Fortune 500) shares up more than 3% in after-hours trading.

The move, long desired by shareholders, comes at a pivotal time for the company. Dell is battling concerns that it, like competitor HP (HPQ, Fortune 500), is being left in the dust by Apple (AAPL, Fortune 500) and other mobile device makers as we move into a post-PC world.

The company expects to pay quarterly cash dividend of 8 cents per share on all common stock starting during the third quarter of this year. Based on Tuesday's closing price of $11.97, the dividend yield would be 2.7%.

CFO Brian Gladden touted Dell's "sustainably strong cash flow" in a company-issued statement.

"The payment of a quarterly cash dividend to Dell's shareholders adds another element to our disciplined capital allocation strategy," Gladden said.

The rise seen in after-hours trading is a promising change in direction for Dell, whose shares have fallen 35% from their 52-week high of $18.36, set in February. The company has yet to recover from a plunge last month after it reported weak earnings. The Round Rock, Texas-based company posted first-quarter revenue of $14.4 billion, a figure that was around $500 million shy of what analysts anticipated.

Dell is a company in transition, shifting away from personal computer sales to focus more heavily on sales of servers and storage services.

Tuesday's announcement shows the company is also redirecting its financial strategy. Dell has long fought shareholder requests to pay dividends, preferring instead to buy back shares.

But the company has been criticized for buying high and sitting on stock as it falls. To top of page

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.