Microsoft's $32 billion cash dividend of December 2004 was the largest corporate payout ever. Classical models of finance and consumption-saving decisions predict that this dividend will have little effect on the consumption of Microsoft investors. Under the assumptions of Merton Miller and Franco Modigliani, for example, investors can always reinvest unwanted dividends, or sell shares to create homemade dividends, and thereby insulate their preferred consumption stream from corporate dividend policies.1 Thus, in traditional models, the division of stock returns into dividends and capital gains is a financial decision of the firm that has no "real" consequence for investor consumption patterns.