It's time for Microsoft to drastically raise its dividend, says Eric Jackson, the founder of hedge fund Ironfire Capital, which owns 12,000 shares of Microsoft.

He argues it would lift the stock price. He also tells us it would assure investors Microsoft isn't going to make "a big dumb acquisition like RIM or Yahoo."

Jackson filed a formal resolution seeking to have Microsoft's dividend doubled. In his letter, Jackson writes, Microsoft's dividend is, "actually quite small on a relative basis." Microsoft's forward dividend yield is 18.7% of operating cash flow, while other S&P 500 companies like Pfizer, Lorillard have 82,1% and 49.7% each.

"I don't think [Microsoft] understands how much investors would embrace it," Jackson says. "Institutional investors would love to park cash in a stock like this." As big investors pile into Microsoft, the stock will lift. Because it will be a recurring dividend, the investors should stick around.

Lifting the stock price is something that's in Microsoft and CEO Steve Ballmer's best interest. Many a Microsoftie grumbles about the negative decade under Ballmer, with the Daily Beast reporting it could lead to Ballmer's ousting. Jackson says of Ballmer, it's "totally unrealistic to suggest Ballmer will go," and, "I invest assuming he's going to be there."

Now that Jackson has filed a formal resolution, he will present his case at the next Microsoft shareholder meeting, which will likely come in November. At the meeting shareholders will vote on the resolution. Jackson can't speak with other shareholders by law about his resolution, so he says he doesn't know if they'll join him or not.

Ironfire only has 0.00014% of Microsoft's shares outstanding, so Jackson will need all the help he can get.

Ironfire Capital Resolution to Microsoft 2010