Is NASDAQ:MSFT a Good Fit for Dividend Investing?

MICROSOFT CORP (NASDAQ:MSFT) has caught the attention of dividend investors as a stock worth considering. NASDAQ:MSFT excels in profitability, solvency, and liquidity, all while providing a decent dividend. Let's delve into the details.

Evaluating Dividend: NASDAQ:MSFT

ChartMill provides a Dividend Rating for every stock, ranging from 0 to 10. This rating assesses various dividend aspects, including yield, growth, and sustainability. NASDAQ:MSFT earns a 7 out of 10:

• Compared to an average industry Dividend Yield of 5765.50, MSFT pays a better dividend. On top of this MSFT pays more dividend than 91.46% of the companies listed in the same industry.
• On average, the dividend of MSFT grows each year by 10.00%, which is quite nice.
• MSFT has paid a dividend for at least 10 years, which is a reliable track record.
• MSFT has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
• 27.36% of the earnings are spent on dividend by MSFT. This is a low number and sustainable payout ratio.
• MSFT's earnings are growing more than its dividend. This makes the dividend growth sustainable.

Analyzing Health Metrics

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:MSFT has received a 8 out of 10:

• MSFT has an Altman-Z score of 8.71. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
• MSFT has a better Altman-Z score (8.71) than 86.83% of its industry peers.
• MSFT has a debt to FCF ratio of 1.08. This is a very positive value and a sign of high solvency as it would only need 1.08 years to pay back of all of its debts.
• MSFT has a Debt to FCF ratio of 1.08. This is in the better half of the industry: MSFT outperforms 77.58% of its industry peers.
• MSFT has a Debt/Equity ratio of 0.28. This is a healthy value indicating a solid balance between debt and equity.
• MSFT does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Exploring NASDAQ:MSFT's Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NASDAQ:MSFT was assigned a score of 8 for profitability:

• MSFT has a better Return On Assets (17.56%) than 98.58% of its industry peers.
• MSFT's Return On Equity of 35.09% is amongst the best of the industry. MSFT outperforms 97.15% of its industry peers.
• MSFT has a better Return On Invested Capital (24.46%) than 98.22% of its industry peers.
• MSFT had an Average Return On Invested Capital over the past 3 years of 24.79%. This is significantly above the industry average of 10.84%.
• MSFT's Profit Margin of 34.15% is amongst the best of the industry. MSFT outperforms 97.86% of its industry peers.
• In the last couple of years the Profit Margin of MSFT has grown nicely.
• MSFT's Operating Margin of 42.33% is amongst the best of the industry. MSFT outperforms 99.64% of its industry peers.
• In the last couple of years the Operating Margin of MSFT has grown nicely.

Every day, new Best Dividend stocks can be found on ChartMill in our Best Dividend screener.

Our latest full fundamental report of MSFT contains the most current fundamental analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.