Tech Dividend Stocks: Microsoft (MSFT)
Dividend yield: 3%
Microsoft (MSFT), like Cisco, also makes the list of high-tech dividend stocks written off by many investors. But in reality, MSFT stock hasn’t been as bad as some detractors may believe.
Shares have only slightly lagged the market since the 2009 lows, and in the same period MSFT has managed to more than double its dividend payouts. Microsoft was paying 13 cents per quarter in 2009 and is now paying 28 cents now, good for a 3% yield.
And Microsoft still has a reasonable forward P/E of about 13, and more than $98 billion in cash and investments. Not bad.
The bears continue to point at overreliance on desktop software in a mobile age; however, MSFT is indeed evolving. New CEO Satya Nadella is proof of this, with his experience running the cloud computing arm of Microsoft undoubtedly a nod to where Microsoft wants to head in the future.
Furthermore, Microsoft’s mobile business is hardly a failure. Windows Phone now commands a double-digit marketshare in Europe, and with BlackBerry (BBRY) abdicating the consumer market for smartphones that will only continue to grow. The integration of Nokia (NOK) hardware as a result of a $4.9 billion buyout proposal late last year will fuel momentum, too, and provide a platform for growth going forward.
With its stock at a fair value, dividends sustainable and tons of cash on the books, patient investor looking for tech dividend stocks should give MSFT a shot. It might just prove its potential.
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Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.