Is NASDAQ:MSFT suited for dividend investing?

Our stock screening tool has identified MICROSOFT CORP (NASDAQ:MSFT) as a strong dividend contender with robust fundamentals. NASDAQ:MSFT exhibits commendable financial health and profitability, all while offering a sustainable dividend. Let's delve into each aspect below.

A Closer Look at Dividend 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:

• Compared to an average industry Dividend Yield of 12.73, MSFT pays a better dividend. On top of this MSFT pays more dividend than 91.67% 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 its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
• 24.68% 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.

Health Analysis for NASDAQ:MSFT

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:MSFT was assigned a score of 7 for health:

• An Altman-Z score of 9.78 indicates that MSFT is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 9.78, MSFT is in the better half of the industry, outperforming 79.35% of the companies in the same industry.
• The Debt to FCF ratio of MSFT is 1.16, which is an excellent value as it means it would take MSFT, only 1.16 years of fcf income to pay off all of its debts.
• MSFT has a Debt to FCF ratio of 1.16. This is in the better half of the industry: MSFT outperforms 71.38% of its industry peers.
• A Debt/Equity ratio of 0.24 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.

How do we evaluate the Profitability for NASDAQ:MSFT?

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:MSFT, the assigned 8 is noteworthy for profitability:

• The Return On Assets of MSFT (17.37%) is better than 93.84% of its industry peers.
• MSFT has a Return On Equity of 30.64%. This is amongst the best in the industry. MSFT outperforms 91.67% of its industry peers.
• MSFT has a better Return On Invested Capital (22.54%) than 94.93% of its industry peers.
• MSFT had an Average Return On Invested Capital over the past 3 years of 23.84%. This is significantly above the industry average of 11.99%.
• The Profit Margin of MSFT (35.43%) is better than 95.65% of its industry peers.
• In the last couple of years the Profit Margin of MSFT has grown nicely.
• MSFT's Operating Margin of 44.96% is amongst the best of the industry. MSFT outperforms 98.91% 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.

For an up to date full fundamental analysis you can check the fundamental report of MSFT

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.