Analyzing NASDAQ:MSFT's Dividend Potential.

MICROSOFT CORP (NASDAQ:MSFT) was identified as a stock worth exploring by dividend investors by our stock screener. NASDAQ:MSFT scores well on profitability, solvency and liquidity. At the same time it seems to pay a decent dividend. We'll explore this a bit deeper below.

How do we evaluate the Dividend for NASDAQ:MSFT?

To gauge a stock's dividend quality, ChartMill utilizes a Dividend Rating ranging from 0 to 10. This comprehensive assessment considers various dividend aspects, including yield, history, growth, and sustainability. NASDAQ:MSFT has achieved a 7 out of 10:

• MSFT's Dividend Yield is rather good when compared to the industry average which is at 8.65. MSFT pays more dividend than 92.96% of the companies in the same industry.
• On average, the dividend of MSFT grows each year by 10.19%, which is quite nice.
• MSFT has paid a dividend for at least 10 years, which is a reliable track record.
• MSFT has not decreased their dividend for at least 10 years, which is a reliable track record.
• 24.70% 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.

A Closer Look at Health for NASDAQ:MSFT

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:MSFT has earned a 7 out of 10:

• An Altman-Z score of 9.51 indicates that MSFT is not in any danger for bankruptcy at the moment.
• MSFT has a Altman-Z score of 9.51. This is amongst the best in the industry. MSFT outperforms 85.56% of its industry peers.
• The Debt to FCF ratio of MSFT is 1.06, which is an excellent value as it means it would take MSFT, only 1.06 years of fcf income to pay off all of its debts.
• The Debt to FCF ratio of MSFT (1.06) is better than 74.30% of its industry peers.
• A Debt/Equity ratio of 0.28 indicates that MSFT is not too dependend on debt financing.
• 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.

Looking at the 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 (17.21%) than 96.13% of its industry peers.
• Looking at the Return On Equity, with a value of 32.83%, MSFT belongs to the top of the industry, outperforming 93.66% of the companies in the same industry.
• With an excellent Return On Invested Capital value of 22.63%, MSFT belongs to the best of the industry, outperforming 97.18% 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 10.24%.
• MSFT has a Profit Margin of 35.96%. This is amongst the best in the industry. MSFT outperforms 96.48% of its industry peers.
• MSFT's Profit Margin has improved in the last couple of years.
• MSFT has a better Operating Margin (44.64%) than 100.00% of its industry peers.
• In the last couple of years the Operating Margin of MSFT has grown nicely.

Our Best Dividend screener lists more Best Dividend stocks and is updated daily.

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

Disclaimer

This article should in no way be interpreted as advice. 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.