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8 Cheapest Dow Dividend Stocks for 2011

5. Microsoft (MSFT - Get Report) is a software company.

Quarter: Microsoft's fiscal first-quarter net income soared 51% to $5.4 billion. Earnings per share surged 55% to 62 cents. Revenue grew 25% to $16 billion. The gross margin rose from 83% to 85% and the operating margin climbed from 35% to 44%. Microsoft held $44 billion of cash and $11 billion of debt at the end of the quarter, equal to a net cash position of nearly $34 billion. A quick ratio of 2.1 and a debt-to-equity ratio of 0.2 signal fiscal prudence.

Valuation: Microsoft's stock trades at a forward earnings multiple of 9.7, a sales multiple of 3.4 and a cash flow multiple of 8.5, 59%, 74% and 53% discounts to software industry averages. However, its book value multiple of 4.8 is on par with peers'. A PEG ratio of 0.7 signals a 30% discount to estimated long-run fair value. Microsoft's trailing earnings multiple of 11 represents a 69% discount to its peer average and a 32% discount to the stock's five-year average.

Dividend: Microsoft pays a quarterly dividend of 16 cents, equal to a yield of 2.4% with a payout ratio of 24%. It boosted the dividend from 33 cents in the latest quarter. It has a record of distribution increases.
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BAC $14.56 0.00%
CVX $102.18 0.00%
HPQ $12.27 0.00%
JPM $63.20 0.00%
MSFT $49.87 0.00%


Chart of I:DJI
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