Balancing Dividends and Fundamentals: The Case of NASDAQ:MSFT.

Take a closer look at MICROSOFT CORP (NASDAQ:MSFT), a stock of interest to dividend investors uncovered by our stock screener. NASDAQ:MSFT excels in fundamentals and provides a decent dividend, all while maintaining a reasonable valuation. Let's break it down further.

Dividend Assessment of NASDAQ:MSFT

ChartMill assigns a proprietary Dividend Rating to each stock. The score is computed by evaluating various valuation aspects, like the yield, the history, the dividend growth and sustainability. NASDAQ:MSFT was assigned a score of 7 for dividend:

• Compared to an average industry Dividend Yield of 11.48, MSFT pays a better dividend. On top of this MSFT pays more dividend than 92.47% of the companies listed 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.
• 24.63% 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.

Looking at the Health

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 7 out of 10:

• An Altman-Z score of 9.81 indicates that MSFT is not in any danger for bankruptcy at the moment.
• With a decent Altman-Z score value of 9.81, MSFT is doing good in the industry, outperforming 78.85% of the companies in the same industry.
• MSFT has a debt to FCF ratio of 1.05. This is a very positive value and a sign of high solvency as it would only need 1.05 years to pay back of all of its debts.
• MSFT's Debt to FCF ratio of 1.05 is fine compared to the rest of the industry. MSFT outperforms 74.91% of its industry peers.
• MSFT has a Debt/Equity ratio of 0.25. 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.

Assessing Profitability for NASDAQ:MSFT

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NASDAQ:MSFT, the assigned 8 is a significant indicator of profitability:

• MSFT's Return On Assets of 17.31% is amongst the best of the industry. MSFT outperforms 94.62% of its industry peers.
• The Return On Equity of MSFT (31.46%) is better than 92.47% of its industry peers.
• MSFT has a better Return On Invested Capital (22.57%) than 96.06% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for MSFT is significantly above the industry average of 11.29%.
• The Profit Margin of MSFT (35.61%) is better than 96.77% of its industry peers.
• MSFT's Profit Margin has improved in the last couple of years.
• MSFT's Operating Margin of 44.49% is amongst the best of 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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For an up to date full fundamental analysis you can check the fundamental report of MSFT

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.