Have you been keeping an eye on Microsoft Corporation’s (NASDAQ:MSFT) upcoming dividend of $0.42 per share payable on the 08 March 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 14 February 2018. Is this future income a persuasive enough catalyst for investors to think about Microsoft as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for Microsoft
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it paying an annual yield above 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How does Microsoft fare?
The company currently pays out 130.95% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect MSFT’s payout to fall into a more sustainable range of 36.64% of its earnings, which leads to a dividend yield of 2.03%. In addition to this, EPS should increase to $2.94, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. MSFT has increased its DPS from $0.44 to $1.68 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Microsoft has a yield of 1.91%, which is high for Software stocks but still below the low risk savings rate.Next Steps:
Whilst there are few things you may like about Microsoft from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key factors you should look at:
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