Market Cap: $250.22 BillionShare Price: $29.78 The software giant jumped into dividends with an annual payment in 2003, and has subsequently earned plaudits for its quarterly returns to shareholders. Moody's ranks Microsoft no. 1 in its list of top-rated technology common dividends, ahead of Intel, IBM (IBM) and Cisco, citing its $5.7 billion return in 2011, a figure which is expected to reach $6.7 billion next year. Microsoft's dividend yield, which reflects its dividend payment in relation to its share price, is currently 2.69%. While this is not the largest yield in Silicon Valley, experts say that the tech giant's dividend strategy is still worthy of investor attention. "It's a dividend yield of roughly 3%," noted Daniel Ives, an analyst at FBR Capital Markets, in an email to TheStreet, adding that Microsoft has done a good job with its cash strategy over the years. The Redmond, Wash.-based tech giant hiked its quarterly dividend by 25% last year, and now makes a quarterly payment of 20 cents a share. The company's dividend has grown by an impressive 150% since it made its first quarterly payment of 8 cents a share in 2004.
The company's broader strategy also looks positive. TheStreet ratings gives Microsoft an A grade and good things are expected from the software maker, particularly with the launch of its eagerly-anticipated Windows 8 operating system later this year. "The key to the stock remains the success of Windows 8 product cycle, which could be a nice catalyst to top-line growth," noted FBR Capital Markets' Ives. "Although the jury is still out of how strong this upgrade cycle will ultimately be in the market." Overall, though, investors are getting behind Microsoft after an underwhelming 2011, pushing its shares up more than 14% this year. Rival Google (GOOG), a famous dividend non-payer, has seen its shares slip more than 11% over the same period. The software giant is also getting plenty of love on Wall Street. Of the 27 analysts surveyed by TheStreet Ratings, 19 rated the company either a 'moderate buy' or 'strong' buy. "[Microsoft's] valuation and risk/reward [is] very attractive," added Nomura Securities analyst Rick Sherlund, in a recent note. "We are bullish on calendar year 2013, anticipating a rich year of strategic and high-margin products in Microsoft's most profitable divisions."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV