Shares of Microsoft rose by 2.7 percent after the company reported strong growth across a variety of its business segments, as highlighted in its fourth-quarter report. This mean that shares were trading around an all-time high of $105, on July 20, 2018.
Microsoft’s market capitalization has also surpassed the $800 billion level for the first time in history. This puts the technology giant behind only Alphabet in the technology firm value stakes. According to Investing.com Senior Analyst, Haris Anwar, who spoke with Digital Journal, some key pieces of information can be read into Microsoft’s recent growth. This growth began a year ago, with the value of the company growing by 41 percent during the last twelve months.
For investors, Anwar ‘s analysis is that Microsoft has upside potential with income growth. He states: “Microsoft is focusing on the areas of technology where it is relevant but where it also has opportunities to lead in the future. If you’re looking for long-term income via a solid dividend stock, I see Microsoft shares as a good fit for this approach to investing. The stock offers upside potential with income growth.”
This is likely to lead to a strong dividend payout. According to Anwar: “Beyond the company’s business strength, the other important factor that makes a stock a good candidate for an income portfolio is the company’s ability to sustain its dividend payouts, and Microsoft has an excellent track record on this score.”
This places the company on what Anwar calls a hot streak. Here he notes: “With an annual dividend yield of 1.7%, Microsoft pays a quarterly dividend of $0.42 per share. That yield may look meager to many investors, but don’t forget that Microsoft stock has had an excellent run during the past 12 months, gaining 45 percent and outperforming many big tech names, including Google, Facebook and Apple.”
The reason why Microsoft has performed so well, Anwar opines, is because the company has successfully defending its turf:
“Despite many considering Microsoft to be simply a legacy tech company that built its business around its Office software and Windows operating system, the company’s wide economic moat remains intact. And it’s the companies that are able to successfully defend their turf from competition that are also the ones able to deliver uninterrupted dividends.”
The recent success means that Microsoft will continue with a number of innovations. These include Holoportation, which is a new type of three-dimensional capture technology that allows high-quality models of people to be reconstructed, compressed and transmitted anywhere in the world in real-time. A second area that Microsoft is investing in is DNA storage, which synthesizes, manipulate and sequences DNA to enable molecular-level data storage. DNA has a density of up to 1 exabyte per cubic millimeter, is durable and easy-to-manipulate.
