Oracle (ORCL) hasbeen the leader in database management software for more than 30 years. That history provides Oracle with an install base that continues to thrive today, counting more than 390,000 customers, including the whole Fortune Global 100.
Oracle’s 2010 acquisition of Sun Microsystems solidified the base even further, allowing ORCL to offer a full “stacked technology” product, in which any and all parts of its hardware and software technology solutions work together seamlessly.
The net result of that huge customer base is profitability: Despite slow revenue growth between 2011-13 from $35.6 billion to $37.2 billion, ORCL’s bottom line has managed to grow from $8.6 billion to $10.9 billion in that same time.
The net result is a cash cow that sported $32 billion in cash and short-term investments on the balance sheet as of the most recent quarter, not to mention $14.2 billion in net operating cash flow for 2012 vs. just $650 million in capex. Even after doubling its dividend to 12 cents per quarter — which investors will reap starting Aug. 2 — it has oodles of money left, and a paltry dividend ratio of 13%.
The huge caveat here is that ORCL doesn’t have the big yield you’d expect from a typical “income stock” — at only 1.5% as of this writing. However, I’ll point to the metrics above as reasons why investors can have a lot of confidence in their yield on cost growing quickly in the years to come.
Like its aforementioned brethren, Oracle is a formidable cash machine with a huge install base that’s figuring out the cloud landscape. Hard not to feel good about that.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he was long AAPL and MSFT.