Healthier Dividend, Shifting Focus, New Products for MSFT

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In late September, Microsoft (MSFT) announced it was boosting its dividend 16%, to 36 cents per share. And, it’s about to pay out that first dividend check.

microsoft stock-msft

What’s more, it looks like MSFT will continue to build on that dividend growth moving forward. One of the biggest indicators of this is management’s dedication to its $14.4 billion stock buyback program. With fewer outstanding shares, MSFT can continue to pay a higher dividend on fewer shares with the same free cash flow.

But, this is hardly the only — or the biggest — news from MSFT in recent weeks.

MSFT Focuses on Cybersecurity

The biggest story for Microsoft stock is its new-found dedication to security. Once the prime target of hackers, MSFT has become one of the industry leaders in cybersecurity measures.

Part of this is because its cloud-based OneDrive is a fast-growing product, and as many other companies have seen, once your online data compromised it’s tough to get consumer confidence back. And, there are plenty of other cloud-based systems to choose from.

MSFT is taking this security commitment seriously, investing $1 billion annually to maintain and improve its cybersecurity. Management is also hiring top cybersecurity executives and has been on a buying spree this past year.

There’s good reason, too, beyond mere reputation management. According to the Identity Theft Resource Center, data breaches are up 100% since last year, and the average cost of a data breach is up 23% in the past two years. Security is not only essential, but a bargain relative to a worst-case scenario for a big player such as MSTF.

That’s why Microsoft has purchased 3 Israeli cybersecurity firms for approximately $600 million since last November, including its most recent deal for Secure Islands.

There are likely two reasons management has favored Israeli firms. First, they usually employ former military cybersecurity workers who are very familiar with how to detect and defend against the newest and most insidious attacks. Israel is creating a cybersecurity niche in the software and app space because of its unique circumstances.

Secondly, with such a relatively small community, it’s much easier to integrate firms from similar backgrounds. That’s a big deal for Microsoft stock, as the company pushes hard toward gaining market share in the cloud.

New Microsoft Products on the Horizon

MSFT is also preparing to launch a mobile version of Windows 10 in the coming weeks and has two Lumia phones (the 950 and 950XL) available for pre-sale now. Most reviews of the operating system’s mobile version are positive, but focus is less on the phones and more on getting the mobile OS out there.

Xbox One (and 360) owners will have a chance to skip the Black Friday madness and get some great deals at MSFT’s online Xbox Store. The goal is to start booking holiday sales as quickly as possible while rewarding customers for showing brand dedication.

The Surface Pro 4 has launched, as has a new top-of-the-line Surface Book, both to critical acclaim. Plus, the new augmented reality HoloLens gaming headset will be out next year, which has the potential to be a blockbuster.

There’s a lot to like in the re-focused MSFT, especially as long-term total return stock.

Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/11/healthier-msft-microsoft-stock-dividend-new-launches/.

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