With the most volatile month for stocks in more than a year mercifully coming to an end, your portfolio might look a lot different now than it looked at the end of January. The early February market correction may have prompted you to whittle your portfolio down to the stocks you truly trust. If so, you’d have been wise to hang onto Microsoft Corp. (NASDAQ:MSFT) stock.
No, MSFT wasn’t impervious to the double-digit correction most other stocks experienced, tumbling 10.5% in just six trading sessions. However, it has since recovered virtually all of that loss, and that brief roller-coaster ride was quite the rarity for Microsoft stock.
Steady Performance in Microsoft Stock
Over the past two years, few stocks have been more reliable than MSFT. It’s up 83% in that time, has increased its dividend twice (by three cents per share each time) and the company has posted six straight quarters of at least 7% sales growth.
With a beta of 1.37, MSFT is far from the least volatile stock on the market, but just look at how that beta compares to some of its blue-chip-tech-stock brethren:
- Alibaba Group Holding Limited (NYSE:BABA): beta of 2.42.
- Amazon.com, Inc. (NASDAQ:AMZN): 1.76.
- Apple, Inc. (NASDAQ:AAPL): 1.30.
- Netflix, Inc. (NASDAQ:NFLX): 1.57.
- Nvidia Corp. (NASDAQ:NVDA): 1.51.
Of those five stocks, only Apple pays a dividend — and one that yields less than Microsoft’s. The only other tech stocks with market caps north of $200 billion that boast a bigger yield all trail MSFT stock by a wide margin in terms of total return over the last two years.
As a company, Microsoft isn’t sexy. It hasn’t been since the PC went out of style and mobile became all the rage, enabling Apple to supplant it as Wall Street’s darling. But despite a few wrinkles (like, say, its latest doomed attempt to revive its Lumia Windows smartphones), Microsoft looks pretty good in its middle age. The company is coming off its best year of top- and bottom-line growth since 2010. Its product line is steady and diverse, if not headline-making (at least not since its LinkedIn buyout 15 months ago). And the company has more cash in its coffers than Apple, Amazon or Alphabet, Inc. (NASDAQ:GOOG).
Buy MSFT for the Next Market Correction
It all adds up to a company that can be counted on. And that’s why Microsoft stock continues to rise despite having long ceded the front-page headlines to all of the companies mentioned above. When times are good, MSFT won’t grow as fast as many of those stocks. But it’s better equipped to weather the turbulence we’re currently encountering.
If it’s pure growth you seek, I’d buy AMZN, GOOG, NFLX or Facebook, Inc. (NASDAQ:FB). However, if you want a stock that checks a lot of the market correction survivor-kit boxes — a growing dividend, modest volatility, steady returns, consistent financial improvements — Microsoft stock is a pretty safe bet.
Now that it has emerged from the recent correction essentially unblemished, this looks like a good buying opportunity before the stock breaks to new highs. Even if it doesn’t, MSFT stock is still a good investment to help get you through the next market correction.
As of this writing, Chris Fraley did not hold a position in any of the aforementioned securities.