Microsoft Corp (NASDAQ:MSFT)

CAPS Rating: 3 out of 5

The world’s leading software company, Microsoft is the force behind the Windows operating systems and the Office suite of software.

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Member Avatar TMFCouchSurfer (53.75) Submitted: 8/5/2014 1:32:15 PM : Outperform Start Price: $43.21 MSFT Score: +0.91

test

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Member Avatar hippoownyou (< 20) Submitted: 7/29/2014 12:33:17 AM : Outperform Start Price: $43.91 MSFT Score: +2.12

Yes, "growth" stock

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Member Avatar notyouagain (29.82) Submitted: 7/26/2014 3:04:57 PM : Outperform Start Price: $45.45 MSFT Score: -1.19

Hey, anybody remember 2009, when so many members with high-flying CAPS scores scoffed at Microsoft, arguing that investing in Microsoft was 'no way to beat the market'?

Dividend investors would sometimes attempt to tell them Microsoft was a money machine, but they wouldn't have any of it.

I wonder how many of those people and people who took their advice doubled their money since then....

The results are IN. Let's have a look.....

On July 31, 2009, Microsoft closed at $23.52 and paid annual dividends of $0.52/share. 100 shares cost $2,352 and paid $52 a year in dividends, for a yield of 2.2%.

With dividend reinvestment, today that 100 shares that cost $2,352 has grown to 113.7881 shares worth $5,063 at Friday's closing price on 7/25/2014.

The dividend has doubled, and now those 113.7881 shares pay annual dividends of $127.44, for an annual yield of 5.42% on that $2,352 investment.

Shares purchased by reinvested dividends have lowered the cost per share from $23.52 to $20.67, while the share price has risen to $44.50.

Pretty much what people who make a hobby of learning to interpret what the financial statements were telling them thought would happen over the long run.

Don't be distracted by short-term thinkers. Everyone who was into dividend investing based on what the numbers in the financial statements were telling them knew that as the dividend grew...and grew...and grew...that investors would continue to value that dividend the same way in the future that they did then.

As long as Microsoft's financial statements continued to inform them that Microsoft remained the same income-generating powerhouse, there was no way that dividend was going to keep growing without the price growing along with it.

There was never any doubt that dividend, growing at a 5-year rate of over 15% per year and backed by Microsoft's unwavering financial strength and ability to pay, would keep the stock in demand from dividend investors. No way that Microsoft was going to be priced to yield 4% or 5% unless it was a really bad dip. No way.

So here we are. Again. Anything changed?

Probably not a lot.

Microsoft closed at $44.50 yesterday, slightly down from my beginning start price of $45.45.

Yahoo!Finance lists a PE of 16.67....and a forward PE of 13.95.

The $1.12 per share of annual dividends it pays out only requires 38% of its (growing) earnings, and its current yield is 2.7%.

CAPS lists its 5-year dividend growth rate at 15.77%.

Microsoft earns $51 for every dollar it pays in interest expense, with an interest coverage of 51.

Their total debt is $23.2B....and their total cash is $85.17B...both as of the most recent quarter.

Current ratio is 2.5.

Trailing twelve month's revenue was $86.83B, with a gross profit of $57.6B. That gives us a gross margin for the trailing twelve months of 66.3%.

So Microsoft turns every $100 in revenue into $66.30 in profit. Don't think that's new. It's been going on for years.

Return on equity is astounding when it's 26.17% and hardly any financial leverage.

Microsoft's 3-year beta is .71. It won't go up as fast as the market, and if the market falls, it shouldn't fall as much, either.

Too high? Too rich for your blood? Are you one of these people who keep complaining they can't find anything underpriced in today's market?

Warren Buffet's greatest discovery is that time is just as important as price. He found that investing in great companies, even at a 'fair' price, and holding them long enough for their sustainable competitive advantages to work their compounding magic, he could get rich without waiting years for the next buying opportunity.

Read 'Warren Buffet And The Interpretation Of Financial Statements'.

Think about it. Your dividend-adjusted price may very likely be HALF what you pay today 5 years from now.

Of course, that's one of the things some of us were trying to tell you 5 years ago.....

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Member Avatar LLukman (54.31) Submitted: 7/24/2014 9:45:02 PM : Outperform Start Price: $44.30 MSFT Score: +1.17

All XP users will need to upgrade to Windows 7 or 8 now, so that's a lot of sales...

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Member Avatar germanjuggler (68.90) Submitted: 7/24/2014 3:51:34 AM : Outperform Start Price: $39.34 MSFT Score: +8.39

Microsoft is gaining traction in all markets my humble guess is that MSFT could reach near-term 50-55 dollar per share and mid-term 60-63 dollars per share and in 3 years 85 plus bucks per share.
Microsoft is well known when a market like the smartphone market is great developed then Bill & Ballmer + Nadella getting big into the game.

When Apple share and market-share starts to shrink to Microsoft then the ex-900 pound gorilla is back big into this game.
Anyway keep an eye on it yeah!

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Member Avatar buckazoid (95.56) Submitted: 7/21/2014 7:26:11 AM : Outperform Start Price: $44.56 MSFT Score: +0.07

MSFT is under new management, and new management recognizes the importance of multiple platforms (tablets, phones) and software as a service. Good.

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Member Avatar Flygal5 (99.16) Submitted: 7/17/2014 8:12:35 PM : Underperform Start Price: $44.65 MSFT Score: +0.51

Laying off 14000 employees this is not a good sign, red thumb

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Member Avatar TMFbuild (34.36) Submitted: 7/8/2014 3:20:49 PM : Outperform Start Price: $41.88 MSFT Score: +6.16

- Steady Business
- Steady source of income (Windows)
- Available cheap
- Good dividend
- Better management than Steve Ballmer

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Member Avatar LadyDragon007 (< 20) Submitted: 6/30/2014 10:09:22 PM : Outperform Start Price: $41.86 MSFT Score: +6.12

wearable techs

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Member Avatar pagliacci100 (61.77) Submitted: 6/5/2014 6:26:39 PM : Outperform Start Price: $39.54 MSFT Score: +6.77

They finally get their role as the master platform. All my Droid and iOS stuff works swimmingly w/ 8.* & their cloud now. Weirdly but true, they're bringing sexy back - everybody is doing deals with them again. Setting upper close to $49

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Member Avatar connorss (< 20) Submitted: 5/30/2014 1:43:11 PM : Outperform Start Price: $40.78 MSFT Score: +6.85

Microsoft is doing some positive things that have the potential to significantly improve their customer relations. The key complaints about Windows 8.1 are related to typical user resistance to change, which will eventually give way to acknowledgement that the new operating system is not only equal in reliability to Windows 7 (which is a huge improvement over Vista), the touch-enabled UI allows the OS to be ported onto mobile devices (such as the Nokia phones, which they now own), which were previously out of Microsoft's reach.

Now add in developments in the XBox side of things: They have actually heard the pressures from their customer base and reduced the purchase price of the XBox One to match that of the PS4 by removing the additional feature (the Kinect) and returning it to being an optional add-on. They removed the silly requirement to be an XBox Live Gold subscriber to use Internet features (such as Netflix or HBO GO) that they already pay for and can access on any other device without any additional charge.

Finally, the Kinect technology is not being limited to the XBox, but is actually being tried out in Laptop applications, so that everyone's dream of controlling their computer by gestures (like the guy in Iron Man) will be that much closer to reality.

I generally hate Microsoft - I often define greedy behavior using examples from their playbook. These days, however, they're doing some interesting things. It all depends on how well they can capitalize on them.

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Member Avatar JStine25 (50.54) Submitted: 5/28/2014 12:16:04 AM : Underperform Start Price: $40.14 MSFT Score: -8.26

Microsoft has lost too much of their customer loyalty. Even older generations are finally moving on to Apple.

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Member Avatar f4ftrjoc (< 20) Submitted: 5/5/2014 6:43:12 PM : Outperform Start Price: $39.02 MSFT Score: +9.54

BETTING ON WHEN THE NEW CEO TAKES HOLD OF THE MSFT BOARD...

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Member Avatar Miketmah (66.70) Submitted: 5/4/2014 5:05:42 PM : Outperform Start Price: $39.24 MSFT Score: +8.38

New aggressive leadership and still a titan with a reasonable current valuation

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Member Avatar dosdinosaur (< 20) Submitted: 4/7/2014 2:24:29 PM : Outperform Start Price: $39.54 MSFT Score: +5.78

Microsoft has repeatedly issued platforms that have performed above board followed by a not so good product. Many believe that the Windows8.1 has taken on the negative after Windows7 great reveal. The next platform, if all goes as it has, will fall into the "I want this" zone.

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Member Avatar OKwarrior (31.76) Submitted: 4/6/2014 1:04:22 AM : Outperform Start Price: $39.68 MSFT Score: +6.41

Hardly my usual small cap, but it is a value stock w/ growth potential.

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Member Avatar trickduke (< 20) Submitted: 3/31/2014 9:15:13 AM : Outperform Start Price: $40.15 MSFT Score: +5.52

new management with new ideas

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Member Avatar fireboy9 (47.67) Submitted: 3/18/2014 11:32:35 AM : Outperform Start Price: $39.37 MSFT Score: +8.22

I believe the new CEO will get a bump up as people anticipate a happy change in the companies fortunes. I think he will get a good 6-8 month honeymoon, as long as they don't fumble to coming out party, and we will be able to make a better estimation of where the company is going over then. For the short term I'm bullish however.

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Member Avatar Dividends500 (71.92) Submitted: 3/8/2014 9:23:30 PM : Outperform Start Price: $35.29 MSFT Score: +14.24

Dividends500 tracks the 200 strongest dividends in the S&P 500. To qualify as a strong dividend, the company must meet two simple requirements:

- A payout ratio below 50%
- An increasing dividend from the prior year

Because there are more than 200 dividend paying companies in the S&P 500 that meet these requirements, the qualifying companies with the largest dividend yields were chosen.

Dividends500 intends to test this FactSet article, which highlights these strong dividend paying companies and their outperformance versus the S&P 500 as a whole (Page 12).

http://www.factset.com/websitefiles/PDFs/dividend/dividend_12.16.13

If you have questions or see something you think is inaccurate feel free to let me know.

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Member Avatar CityFrFTW (< 20) Submitted: 2/11/2014 2:18:12 AM : Outperform Start Price: $36.35 MSFT Score: +13.39

End of XP Support is Jackpot for "late" migrators ( 1 on 2 large corporate environements i know), Deadline is July before unpatched security breaches in the wild.

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