Microsoft Bucking Head Winds As Stock, Dividend Rise

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Software giantMicrosoft ( MSFT ) is battling criticism of its Windows 8 operating system, declining PC sales and stiff competition for its Xbox game machines.

Yet the stock is up 25% this year, easily outpacing the S&P 500. It's getting support at its 50-day line after running up past a 31.71 saucer buy point. The test of support normally puts a stock in a follow-on buy area, but the market's correction makes any new purchases risky.

Meanwhile, the Redmond, Wash.-based company has increased its dividend steadily since its debut at 8 cents a share in late 2004. It raised the quarterly payout this fiscal year by 15% to 23 cents a share, or 92 cents annually. That's good for an annual yield of 2.7% at the current share price, topping the S&P 500 average of 2.5%.

Microsoft had ranged between a high of 32.95 and a low of 22.73 for several years. But a better-than-expected quarterly earnings report in April propelled the stock to a peak of 35.78, its highest since Jan. 2008.

Zacks Investment Research said in a June 11 note that Microsoft's "dominant position in the PC market continues to be challenged by new-age devices, as well as weak consumer spending in developed countries."

However, it added that the company's "huge core business, promising new products, enterprise refresh cycles and cost-reduction initiatives are driving strong cash flows and earnings growth."

Microsoft's Composite Rating is 90, indicating that it's outperforming 90% of all listed companies in five key fundamental categories.

Its three-year earnings stability factor is 5 on a scale of 0 to 99, with 0 being most stable. Profit for the fiscal year ending this month is expected to dip 1% to $2.75 a share before rebounding 11% in fiscal 2014.



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



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: MSFT

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