June 25, 2025 a 11:31 am
MSFT: Dividend Analysis - Microsoft Corporation
Microsoft Corporation has consistently demonstrated a strong commitment to returning value to shareholders through dividends. With a proven track record of 23 years of uninterrupted dividend payments and a competitive yield, Microsoft remains a reliable choice for dividend-focused investors. Despite its modest yield, the company showcases robust dividend growth, making it a compelling option for those seeking capital appreciation and predictable income. The technical analysis indicates no recent dividend cuts or suspensions, underscoring Microsoft's financial resilience.
📊 Overview
Microsoft operates in the Information Technology sector. As of the most recent data, the company boasts a dividend yield of 0.68% with a current dividend per share of USD 2.93. Impressively, Microsoft has maintained 23 consecutive years of dividend history, signaling strong dividend stability. It's important to note that there has been no recent suspension or cut in dividends.
| Sector | Dividend Yield | Current Dividend Per Share | Dividend History | Last Cut/Suspension |
|---|---|---|---|---|
| Information Technology | 0.68% | 2.93 USD | 23 years | None |
🗣️ Dividend History
Microsoft's dividend history is a testament to its strong track record in shareholder value distribution. The consistency in dividend payments over the years is crucial as it reflects financial health and commitment to returning capital. This stability is attractive to investors seeking reliable income streams.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 2.49 |
| 2024 | 3.08 |
| 2023 | 2.79 |
| 2022 | 2.54 |
| 2021 | 2.30 |
📈 Dividend Growth
Analyzing dividend growth is essential for understanding a company's future dividend potential. Microsoft's 3-year growth rate at 10.22% and a 5-year growth rate of 10.26% demonstrate moderate but consistent growth. This indicates the company's ability to enhance shareholder returns over time.
| Time | Growth |
|---|---|
| 3 years | 10.22% |
| 5 years | 10.26% |
The average dividend growth is 10.26% over 5 years. This shows moderate but steady dividend growth, which is promising for long-term investors.
✅ Payout Ratio
The payout ratio is crucial for assessing whether a company can sustain its dividends. The EPS-based payout ratio of 22.54% and FCF-based payout ratio of 31.39% indicate that Microsoft is comfortably paying dividends without constricting its financial flexibility. These low ratios suggest room for potential dividend increases.
| Key figure ratio | Value |
|---|---|
| EPS-based | 22.54% |
| Free cash flow-based | 31.39% |
The payout ratios highlight Microsoft's prudence in maintaining a balance between distributing dividends and investing in growth opportunities.
⚠️ Cashflow & Capital Efficiency
Robust cash flows and capital efficiency are fundamental to sustainable dividend payments. Microsoft's free cash flow yield stands at 1.90%, while the earnings yield is 2.65%. The CAPEX to operating cash flow ratio is favorable, indicating efficient capital allocation. Stock-based compensation is 4.30% of revenue, suggesting cautious employee incentives.
| Figure | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 1.82% | 2.35% | 3.38% |
| Earnings Yield | 2.60% | 2.85% | 3.78% |
| CAPEX to Operating Cash Flow | 37.52% | 32.09% | 26.83% |
| Stock-based Compensation to Revenue | 4.37% | 4.54% | 3.78% |
| Free Cash Flow / Operating Cash Flow Ratio | 62.48% | 67.91% | 73.17% |
The solid cash flow and efficient capital utilization indicate Microsoft's robust financial health, supporting steady dividend payouts.
💼 Balance Sheet & Leverage Analysis
A healthy balance sheet reinforces financial stability. Microsoft's debt-to-equity ratio of 25.00% and interest coverage ratio of 37.29 exemplify prudent leverage management. The quick ratio suggests ample liquidity to meet short-term obligations.
| Ratio | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 25.00% | 29.08% | 36.79% |
| Debt-to-Assets | 13.11% | 14.56% | 16.79% |
| Debt-to-Capital | 20.00% | 22.53% | 26.89% |
| Net Debt to EBITDA | 0.37 | 0.24 | 0.47 |
| Current Ratio | 1.37 | – | – |
| Quick Ratio | 1.27 | 1.75 | 1.75 |
| Financial Leverage | 1.91 | 1.99 | 2.19 |
The leverage ratios and liquidity metrics imply significant financial flexibility, fostering long-term sustainability.
💪 Fundamental Strength & Profitability
Profitability metrics such as Return on Equity (ROE) and margins provide insight into operational efficiency. Microsoft's ROE of 32.73% in 2024 highlights robust performance, and consistent margins underscore stable profitability.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 32.83% | 35.09% | 43.68% |
| Return on Assets | 17.21% | 17.56% | 19.94% |
| Net Margin | 35.96% | 34.15% | 36.69% |
| EBIT Margin | 45.17% | 43.07% | 43.26% |
| EBITDA Margin | 54.26% | 49.61% | 50.56% |
| Gross Margin | 69.76% | 68.92% | 68.40% |
| Research & Development to Revenue | 11.75% | 12.83% | 12.36% |
These numbers reflect Microsoft's operational excellence and its ability to sustain attractive shareholder returns through effective resource allocation.
🛍️ Price Development
📝 Dividend Scoring System
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 5 | |
| Dividend growth | 4 | |
| Payout ratio | 4 | |
| Financial stability | 5 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 4 |
Overall Score: 34/40
⭐ Rating
Microsoft Corporation demonstrates strong fundamentals with room for future dividend growth. Its steady performance across various financial metrics denotes a robust investment. The comprehensive blend of stability, growth, and financial strength secures Microsoft a high ranking in dividend portfolios.