Tech behemoth Microsoft is returning more cash to its shareholders. The Redmond, Wash.–based company can certainly afford it: Microsoft is awash in free cash flow and has a $96 billion hoard.

Microsoft raised its quarterly payout 16% last week, to 36 cents per common share, from 31 cents. Since initiating a dividend in 2003, the world’s largest software company has become a consistent and high-yielding dividend payer in a sector not…