Hey All You Dividend-Seeking Utility Investors: Have You Heard of a Company Called Microsoft?


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Could it be that Microsoft ( MSFT ) is making a turnaround? That's what the Wall Street Journal argues, pointing to the new Outlook e-mail and upcoming Surface tablet as positive signs that the company is playing to its core strengths.

And the panning it got in Vanity Fair was perhaps another positive sign, on the theory that major magazines run feature stories only after the market has priced in the news they're reporting.

But rather than think of Microsoft as a company trying to regain its glory days as a growth stock, think of it instead as a utility. And if that's the case, take a look at this.

MSFT data by YCharts

Yes, net income has risen smartly along with R&D inputs over the past decade. But Microsoft watchers would argue that the increase in profits has come largely from milking the company's existing franchise in PCs. Keeping there, of course, requires ongoing R&D. But the efforts at new and transformative products hasn't been very productive.

From that point of view, Microsoft's research budget looks bloated. As YCharts reported here , it far outstrips the research and development spending at Apple ( AAPL ). So if Microsoft is really changing with the times, adapting to today's market, it seems like it would slim this down.

And perhaps return more of its profits to shareholders. Here we see a nice dividend yield and, with a relatively low payout ratio, plenty of room to hike the dividend.

MSFT Dividend Yield data by YCharts

From the editors of YCharts. YCharts Pro Investor Service includes professional stock charts , stock ratings and portfolio strategies .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: investing , Stocks
More Headlines for: AAPL , MSFT

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