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Microsoft Is a Must-Have for Your Portfolio

NEW YORK ( TheStreet) -- Strange looks and "Oh, OK" are typically the responses I receive when I tell people that Microsoft (MSFT - Get Report) and General Electric (GE) are the stocks they should buy.

When people ask me for stock tips, I know that most of the time they're thinking of companies that will make them a lot of money quickly.

But they should be thinking instead about stocks that will deliver a better-than-average return with the least amount of risk.

If your eyes aren't sore from staring at charts and Securities and Exchange Commission filings all day, leave the home runs to the traders who can get in and out of securities before you even hear about the news.

Some stocks are natural fits for long-term investors who seek to build real wealth over time. As a rule, this means dividend-paying stocks that dominate their space and don't have issues on their balance sheets or income statements.

I've touted the virtues of Microsoft (MSFT - Get Report) for more than a year, but the company remains a strong buy. You may think of "Mr. Softee" as little more than the maker of Windows, but that's a mistake. Microsoft's Azure is also one of the biggest players in cloud computing.

Microsoft maybe the largest player by revenue when you consider that (AMZN), Google (GOOG), Rackspace (RACK), IBM ( IBM), Hewlett-Packard (HPQ) and others are all paying Microsoft for every Windows-based server they host.

From my experience, Azure was much easier and straightforward to set up than Amazon's AWS. Both are priced about the same, giving Microsoft the edge due to a smaller learning curve. Cloud computing isn't where the real money is, not yet at least. And business software, Microsoft's cash cow, has proven it can compete against free software relatively easy.

MSFT Operating Income Annual Chart MSFT Operating Income Annual data by YCharts

The market reacted positively to the announcement of CEO Steve Ballmer stepping down even though operating profits have climbed at a rapid pace since Ballmer took over in 2000. The company has the resources to hire the very best talent, and you can expect another pop higher in shares once the replacement is announced.
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