For most people, passive income is a little extra spending money that requires minimal effort to supplement a primary source of income. For Steve Ballmer, it’s $1 billion.
Ballmer, the world’s sixth-richest person, is expected to receive that much dividend from Microsoft in 2024. This comes after the tech giant increased its quarterly dividend to 75 cents per share, or $3 per share per year.
Since Ballmer, the former CEO of Microsoft, owned 333.2 million shares of the company in 2014 (the last time he filed an ownership declaration and appears to have adjusted his Microsoft shares), the equivalent of a 4% stake, he would only receive less than $1 billion in fiscal 2024. It’s simply a matter of owning the stock, regardless of how it performs.
Ballmer did not respond to a request for comment.
This, of course, assumes that Microsoft’s board doesn’t decide to slash dividends. But that doesn’t seem likely. Since the company started paying dividends to its shareholders in 2003, the amount has only increased.
Ballmer won’t be the only one to benefit. Uncle Sam will also receive a generous share.
Given that Ballmer reported $656 million in income to the Internal Revenue Service in 2018 according to ProPublica, it’s probably safe to say that he will be subject to the 20% dividend tax for people earning taxable income of $500,000 per year or more. That means it will pay nearly $200 million in taxes on the Microsoft dividends it receives.
Ballmer isn’t the only one making big money by owning dividend-paying stocks.
Warren Buffet’s Berkshire Hathaway is expected to collect $6 billion in dividends for the year, according to a Wall Street Journal analysis. Indeed, the majority of shares that Berkshire Hathaway invests in pay dividends. This list includes Chevron, Bank of America, Apple, Coca-Cola, Kraft Heinz and American Express.
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