Where does Microsoft rank after its 8% announced dividend increase?

top-100

Microsoft is a global provider of software, hardware, and services. The firm maintains three separate parts including software like Microsoft Windows/Office, cloud based services like Azure, and the hardware/software side including tablets, phones, Xbox. The last segments also includes the Bing search site and generates nearly half of Microsoft’s revenue.

Microsoft Corporation announced a regular quarterly dividend of $0.39, an 8 percent increase from the prior rate of $0.36 per share. The dividend will be paid at the new higher rate on December 8, 2016, to shareholders of record at close of business on November 17, 2016. Microsoft Corp. is a member of the Top 100 dividend  candidates.

Listed in the table below are the quarterly dividend payments since 2010. Our analysis of Microsoft as a Top 100 Dividend Stock candidate is listed below;

 

Date Quarterly Dividend
11/17/2016 0.39
8/16/2016 0.36
5/17/2016 0.36
2/16/2016 0.36
11/17/2015 0.36
8/18/2015 0.31
5/19/2015 0.31
2/17/2015 0.31
11/18/2014 0.31
8/19/2014 0.28
5/13/2014 0.28
2/18/2014 0.28
11/19/2013 0.28
8/13/2013 0.23
5/14/2013 0.23
2/19/2013 0.23
11/13/2012 0.23
8/14/2012 0.2
5/15/2012 0.2
2/14/2012 0.2
11/15/2011 0.2
8/16/2011 0.16
5/17/2011 0.16
2/15/2011 0.16
11/16/2010 0.16
8/17/2010 0.13
5/18/2010 0.13
2/16/2010 0.13

Analysis of Microsoft is based upon our five key criteria for the Top 100 list, which include; 

Category Value Score
Dividend Yield 2.53 115
Dividend Growth (5 year VL) 17% 58
Trailing P/E 27.6 215
S&P Financial Rating A++ 40
Beta 1.00 125
Total Ranking #91 553

Additional Information;

Price 9/21/16 % Yield 5 Year Div. Growth Rate  SPS    2016 P/S Ratio 10 yr P/S Low 10 yr P/S  High 5 yr max Yield % 5 yr lowest Yield %
$57.76 2.53% 17% 11.78 4.90 2.27 8.91 3.13% 2.22%

Final Analysis;

  • Microsoft’s dividend yield is above that of the S&P 500 Index and is also trading towards the lower end of its average historical dividend yield.
  • Microsoft maintains a 5 year dividend growth rate of 17%   This is lower than 7 other companies in the sector and ranks 58 among all companies.
  • Microsoft has paid out a dividend consecutively for the past 14 years.
  • Microsoft is trading below its average price/book value (P/S) range at 4.90.  From a relative valuation perspective, Microsoft is undervalued based upon its historical trading history.
  • Microsoft maintains a credit rating of A++. This is above investment grade, a positive.
  • Microsoft maintains a beta of 1.00, on average with the market.
  • Microsoft’s total ranking is 91.

Microsoft has turned the corner from a stodgy maker of computer software to providing critical cloud service through its Azure product. This product is now only behind Amazon in providing cloud services. As most companies are migrating to teh cloud, this offers Microsoft new opportunities to grow quickly and energize revenue.

It noteworthy and popular Windows 10 has enjoyed strong demand along with the newer surface personal computer products. Office is now moving away from a purchase to a subscription service, which offers continuity in revenue. Its personal product group including the Surface and the Xbox continue to bring in solid revenue. Based upon its new Azure revenue growth potential, high dividend growth rate,  and high credit rating, Microsoft qualifies as one of our Top 100 Dividend Stocks.

Microsoft Corp. Dividend Yield Chart (Click to enlarge)

msft3

Chart Explanation:  Dividend growth stocks may be viewed favorably when the current yield is above historical readings for the past 5 years.

Further information on dividend investing and evaluating dividend growth candidates can be found at http://seekingalpha.com/author/timothy-mcintosh/articles

One thought on “Where does Microsoft rank after its 8% announced dividend increase?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s