Dividends in Focus: Microsoft Corporation (MSFT)

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Software juggernaut Microsoft Corporation (MSFT) had a banner year from a price perspective, gaining almost 37% in 2013. Let’s examine the company’s current dividend policy and what lies in store for the stock in 2014 from a dividend standpoint.

Microsoft’s Current Dividend Policy

Microsoft currently pays a quarterly dividend of 28 cents per share, or $1.12 annualized, and offers a yield around 3.06%. The company lifted its payout by 22% in 2013, following last year’s raise of 15%, and 2011′s raise of 25%. Its payout ratio for 2013 was about 42%, based on analysts’ full-year estimates, and its 2014 payout ratio is projected at 38%. Given its growing earnings and strong cash flow, MSFT should be aiming for another generous dividend increase next year.

Dividend.com DARS Ratings for Microsoft Overall Rating:Neutral (3.4/5) Metric Rating Explanation

Relative Strength		Stock is performing in-line with the market or better.
Overall Yield Attractiveness		Stock’s dividend yield is above average.
Dividend Reliability		This rating is related to the length and consistency of a company’s dividend payouts, as well as our opinion on how likely the company is to continue payouts in the future.
Dividend Uptrend		Dividend payouts are consistent, but increases small.
Earnings Growth		Earnings estimates are uptrending.