Dell, the world's third-largest maker of personal computers, will pay a quarterly dividend of 8 cents a share, following technology peers such as Apple and Microsoft in returning cash to shareholders.
The payout will begin in the fiscal third quarter, which ends in October, the Texas-based company said today in a statement.
The dividend's yield would be 2.7 per cent.
Shares rose as much as 6.6 per cent in extended trading.
Dell, in the midst of an uneven turnaround effort, is awarding its first dividend as an incentive to stockholders after shares fell 23 per cent in the past year.
With revenue estimated by analysts to drop 3 per cent this year, chief executive officer Michael Dell has been acquiring makers of data storage, networking gear and business software to diversify beyond PCs and revive growth.
At the company's annual meeting last July, a shareholder proposal for a dividend was defeated.
"It's been something investors have asked about for years now," said Jayson Noland, an analyst at Robert W Baird and Co in San Francisco. "The reaction will be positive."
Dell may generate $2.25 a share in free cash flow this year, or about 19 per cent of its market value, according to Mr Noland, who has a neutral rating on the shares.
"You don't typically see companies with free cash flow yields that high, and when you do, investors are saying, 'We don't think we're ever going to see this free cash,' " he said.
The company ended the fiscal first quarter with $17.2 billion in cash and investments, chief financial officer Brian Gladden said last month.
Dell's announcement follows the start or boost of dividends at some other large technology companies, many of which eschewed such payments while accumulating large cash holdings to use for research, development and acquisitions.
Apple, the world's largest company by market value, in March said it would pay its first dividend in 17 years, heeding investors who urged it to return part of its cash hoard.
Microsoft, the biggest software maker, in 2003 acceded to shareholders' demands for a cash return by paying its first dividend. It raised the payout by 25 per cent last year.
Revenues at Dell Direct, the computer giant’s Dublin-based sales and support operation, last year increased by 23.75 per cent from €104 million to €128 million. The staff last year rose from 1,066 to 1,199.
Bloomberg
