Why NASDAQ:MSFT is a Top Pick for Dividend Investors.

Discover MICROSOFT CORP (NASDAQ:MSFT)—a stock that our stock screener has recognized as a solid dividend pick with strong fundamentals. NASDAQ:MSFT showcases decent financial health and profitability while providing a sustainable dividend. We'll explore the specifics further.

Dividend Analysis for NASDAQ:MSFT

ChartMill assigns a Dividend Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing various dividend elements, such as yield, historical performance, dividend growth, and sustainability. NASDAQ:MSFT has been awarded a 7 for its dividend quality:

• MSFT's Dividend Yield is rather good when compared to the industry average which is at 6276.04. MSFT pays more dividend than 91.46% of the companies in the same industry.
• The dividend of MSFT is nicely growing with an annual growth rate of 10.00%!
• MSFT has been paying a dividend for at least 10 years, so it has 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.
• 26.24% of the earnings are spent on dividend by MSFT. This is a low number and sustainable payout ratio.
• The dividend of MSFT is growing, but earnings are growing more, so the dividend growth is sustainable.

Health Insights: NASDAQ:MSFT

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:MSFT, the assigned 8 reflects its health status:

• MSFT has an Altman-Z score of 9.25. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
• MSFT has a Altman-Z score of 9.25. This is amongst the best in the industry. MSFT outperforms 86.12% of its industry peers.
• MSFT has a debt to FCF ratio of 1.42. This is a very positive value and a sign of high solvency as it would only need 1.42 years to pay back of all of its debts.
• MSFT has a Debt to FCF ratio of 1.42. This is in the better half of the industry: MSFT outperforms 77.58% of its industry peers.
• A Debt/Equity ratio of 0.38 indicates that MSFT is not too dependend on debt financing.
• Although MSFT does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
• The current and quick ratio evaluation for MSFT is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Profitability Examination for NASDAQ:MSFT

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 Return On Assets of 17.29%. This is amongst the best in the industry. MSFT outperforms 97.51% of its industry peers.
• MSFT has a better Return On Equity (34.93%) than 96.44% of its industry peers.
• With an excellent Return On Invested Capital value of 23.01%, MSFT belongs to the best of the industry, outperforming 97.51% of the companies in the same industry.
• The Average Return On Invested Capital over the past 3 years for MSFT is significantly above the industry average of 10.34%.
• Looking at the Profit Margin, with a value of 35.31%, MSFT belongs to the top of the industry, outperforming 97.86% of the companies in the same industry.
• In the last couple of years the Profit Margin of MSFT has grown nicely.
• MSFT has a Operating Margin of 43.55%. This is amongst the best in the industry. MSFT outperforms 100.00% of its industry peers.
• MSFT's Operating Margin has improved in the last couple of years.

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Check the latest full fundamental report of MSFT for a complete fundamental analysis.

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.