Microsoft Stock Dividend Analysis: What Investors Should Know

No matter any investor’s opinion on the inventory of Microsoft
MSFT
, one factor is evident: it doesn’t undergo from lack of identify recognition. The inventory additionally pays a dividend, and has since February 2003.

Nevertheless, a constant dividend cost will not be sufficient for traders who’re evaluating a inventory they don’t personal, if the dividend yield (the share of the worth of the inventory represented by the dividend cost) is just not very excessive. Let’s take a better have a look at MSFT’s dividend, in addition to the corporate’s historical past of dividend funds and dividend progress.

Does Microsoft Inventory Pay Dividends?

MSFT has paid dividends since 2003, starting with payouts of $0.08 per share and rising it by the years to a present payout of $0.68 per share every quarter. Alongside the truth that it’s a dividend-paying firm, Microsoft’s income progress has averaged slightly below 15% over the previous 5 years. Over that very same interval, its earnings per share (EPS diluted progress) has elevated at a 39% annual fee, a outstanding enhance for any enterprise, and particularly for a corporation this massive and established. Throughout that very same five-year timeframe, MSFT’s inventory value has tripled (up 200%). This has been one of many true inventory market leaders in recent times, amongst dividend shares, but additionally amongst shares of any sort.

Microsoft Inventory Dividend Yield

As of September 14, MSFT’s dividend yield (over the previous 12 months, a standard measure of dividend yield) was 0.81%. That won’t symbolize the foremost a part of a purchase thesis for potential traders within the shares. By comparability, the S&P 500 yields 1.46% and an ETF that tracks the 80 highest-yielding shares within the S&P 500
SPYD
yields 4.85%.

That mentioned, MSFT is among the main U.S.-based know-how firms and the Expertise Choose Sector SPDR ETF
XLK
, which tracks the S&P 500’s know-how sector, of which MSFT is a outstanding member, yields 0.79%. So, the inventory’s low yield is typical of the tech sector, the place firms are likely to pay out a comparatively low portion of income, preferring to place these earnings again into the enterprise to proceed to develop earnings, and hopefully the inventory value with it.

If it is dividend earnings you are in search of, there are different greater yielding shares that put money of their traders pockets rather more than Microsoft. The Forbes Funding crew has recognized 5 of these in 5 Dividend Shares To Beat Inflation, a particular report from Forbes’ dividend skilled, John Dobosz.

Dividend Payout

Payout ratio is a key consider evaluating whether or not an organization’s dividend payout is sustainable. If a enterprise pays out all its income as dividends, that will line shareholders’ pockets for some time, nevertheless it leaves little or no room for error. MSFT doesn’t have this difficulty. The corporate’s payout ratio stands at 28%, which suggests lower than ⅓ of its income are distributed to shareholders as a dividend. By comparability the opposite three largest shares within the U.S. tech sector have various payout ratios, and all are fairly completely different from MSFT’s. Apple’s payout ratio is 15%, Nvidia’s is barely 3% and Broadcom’s
AVGO
stands at 44%,

For MSFT, this paints a strong image of an organization that desires to pay a daily dividend, however acknowledges that isn’t the primary attraction to shareholders. Microsoft could also be a really mature enterprise, however it’s nonetheless a progress firm.

Dividend Development

Whereas a excessive dividend is perhaps a pleasant headline statistic for traders, firms that develop their dividends are thought of to be a 1-2 punch for proudly owning a inventory. Firms that develop their dividends 12 months after 12 months probably have the earnings progress to help that.

MSFT has elevated its per share dividend cost yearly for 18 consecutive years. That consistency and progress within the dividend cost is considered one of many causes the corporate is taken into account a market chief. Moreover, it has grown that dividend by 10% yearly over the previous 5 years, which is proof of its dedication to that annual payout. By comparability, Apple
AAPL
has grown its dividend by lower than 7%, and Nvidia by only one%. Broadcom’s dividend has grown by 23% throughout that point, leaving MSFT once more in the course of three of its tech sector friends.

MSFT Inventory Dividend Historical past

As is the case with most U.S. dividend shares, MSFT pays its dividend quarterly. Its final cost had an ex-date of August 16, which implies that an investor wanted to personal the inventory by that date to qualify to obtain the dividend. That can also be the date when MSFT’s inventory value was decreased on the opening of inventory market buying and selling, by the quantity of the dividend, which was $0.68 for that August cost. The dividend is paid out shortly after the ex-date, and Microsoft paid its shareholders on September 14.

MSFT’s sub-1% dividend yield is largely as a result of its inventory value rising quicker than its willingness to develop its dividend, one thing that is quite common with know-how firms. Throughout its historical past, MSFT’s yield has briefly crossed the three% stage on a couple of events, most not too long ago throughout 2015. In November 2021, its yield sat all the best way down at 0.49%, the bottom fee it has seen because the firm began its dividend progress streak 18 years in the past.

If it is dividend earnings you are in search of, there are different greater yielding shares that put money of their traders pockets rather more than Microsoft. The Forbes Funding crew has recognized 5 of these in 5 Dividend Shares To Beat Inflation, a particular report from Forbes’ dividend skilled, John Dobosz.

MSFT Dividend FAQs

Listed below are solutions to some widespread questions traders could have about MSFT’s dividend:

Is Microsoft’s dividend low?

Sure, in comparison with the broad inventory market (S&P 500) and to many dividend shares. However MSFT’s yield is just like that of its sector common, the know-how sector.

Solely three of the 5 largest tech shares by market cap pay dividends and Microsoft has the best yield: Apple (0.51%), Microsoft (0.94%), Alphabet (none), Amazon (none) and Nvidia (0.04%).

How usually does Microsoft pay a dividend?

MSFT pays its dividend quarterly, sometimes in February, Could, August and November.

What number of years has Microsoft’s dividend grown?

MSFT has a powerful streak of rising its dividend for 18 consecutive years.

Backside Line

MSFT has grow to be an iconic firm throughout our lifetime. Invoice Gates’ unique dream many years in the past is now a progress inventory chief, know-how chief and innovator, and really international big. That mentioned, its dividend yield is just not the very first thing traders is perhaps in search of. However its file of dividend progress and consistency, together with its low dividend payout ratio, symbolize potential factors of stability traders can weigh into their selections.

If it is dividend earnings you are in search of, there are different greater yielding shares that put money of their traders pockets rather more than Microsoft. The Forbes Funding crew has recognized 5 of these in 5 Dividend Shares To Beat Inflation, a particular report from Forbes’ dividend skilled, John Dobosz.