High Dividend Stocks — Microsoft (MSFT)
Market Cap: $333.7 billion
Dividend Yield: 2.8%
Like Cisco, Microsoft (MSFT) is another tech stock that has been written off as dead money by a lot of investors. But perhaps those investors haven’t been paying attention lately.
Shares of MSFT stock are up more than 40% in the last 12 months. That’s more than the 33% gain for the Nasdaq in the same period, and more than its arch rival Apple (AAPL), which has put up a measly 17% in the same period.
All this and Microsoft still has a reasonable forward P/E of about 13, and more than $98 billion in cash and investments.
Now, it’s hard to argue against the fact that Microsoft has staying power. But what makes it a buy right now, and how can investors have faith the dividends will keep flowing as share will power higher?
First, new CEO Satya Nadella and his experience running the cloud computing arm of Microsoft will help existing products evolve and succeed. That’s crucial if MSFT is going to move beyond its reliance on Windows, Office and other PC-focused revenue.
Furthermore, Microsoft’s mobile business is going strong. Windows Phone now commands a double-digit market share in Europe, and what 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.
With its stock at a fair value, dividends sustainable and tons of cash on the books, patient investors should give Microsoft a shot to prove its potential to them. Though it may not provide the pop of one of the tech sector’s newest darlings, other dividend stocks will have a tough time matching the dividend potential and stability.