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Should I buy Oracle stock after the company increases its quarterly dividend?

Oracle Corporation (NYSE:ORCL) reported strong fourth-quarter results on Monday, and shares of the company rose on a weekly basis.

Oracle increased its quarterly dividend by 18.5% and Chief Executive Safra Catz said the company expects first-quarter revenue to rise between 20% and 22% from a year ago.

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Oracle increased its quarterly dividend

Oracle Corporation is an American multinational computer technology company that sells computer software, cloud engineering systems, and enterprise software products.

Oracle released its fourth quarter results on Monday; total revenue increased 5.4% year-on-year to $11.84 billion, while non-GAAP earnings per share were $1.54 (vs. $0.16). Safra Catz, CEO of Oracle, said:

What the fourth quarter demonstrates is that our business is accelerating. A growing list of customers, many new to Oracle, are choosing us for more products and services because they understand the benefits of Oracle technology.

Total cloud services and licensing support revenue increased 3% year-over-year to $7.61 billion, representing 64% of total company revenue. Cloud and on-premises licensing revenue increased 16% to $2.54 billion, while hardware sales fell 3% to $856 million.

For the quarter, cloud services and license support gross margin was 82%, and gross profit in dollars increased 4%. Oracle will continue to invest in growth and the company will continue to return value to its shareholders through technical innovation, strategic acquisitions, share buybacks, prudent use of debt and a dividend.

During the fourth quarter, Oracle repurchased 8 million shares for a total of $600 million, and it’s worth mentioning that the company has paid dividends of $3.5 billion over the past 12 months.

A positive news is that the board declared a dividend per share of $0.32/quarter this week, which represents an increase of 18.5% compared to a previous dividend of $0.27. The dividend will be payable on July 26 to shareholders of record on July 12, 2022.

Chief Executive Safra Catz said the company expects first-quarter revenue to grow between 20% and 22% from a year ago, while earnings per share are expected to be in a range of $1.09 to $1.13.

Basically, Oracle is trading at less than ten times TTM EBITDA, and with a market capitalization of $185 billion, shares of this company are reasonably valued.

$60 represents a high level of support

Data source: tradingview.com

The strong support level lies at $60, while $75 represents the first level of resistance. If the price breaks below $60, that would be a “sell” signal, and we have the open way down to $55 or even below.

On the other hand, if the price breaks above $75, the next target could be $80.

Summary

Oracle Corporation announced better than expected fourth quarter results and the company’s management announced its decision to increase the quarterly dividend. Oracle will continue to invest in growth, and Chief Executive Safra Catz said the company expects first-quarter revenue to grow between 20% and 22% from a year ago.

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