Microsoft Bucking Head Winds As Stock, Dividend Rise


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, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: MSFT

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