MSFT: The Best of Both Worlds
It’s called the blue screen of death…
Maybe you know what I am talking about.
You boot up your laptop or desktop and you see this…
Thanks to having two tech-savvy daughters, I didn’t panic when this happened to me last week. I called them and they walked me through the fix.
I rebooted into safe mode and then, just like it was the good ol’ DOS days, we ran a string of command prompts to check the system BIOS settings and blah, blah, blah.
Long story short, my laptop is working fine and all without shelling out a few hundred at a repair center.
But I have to say the experience has made me much more appreciative of the Microsoft (NASDAQ: MSFT) Windows interface. I forgot what a pain in the rear DOS prompts were.
And that got me thinking.
High-Tech Main Street
There’s not a house or business on Main Street in America that doesn’t use or benefit from Microsoft’s technology.
From gaming systems to tablets to phones and software, odds are some aspect of Microsoft plays a part of your life.
Have kids or grandkids?
You’ve probably bought them one of the many iterations of their gaming hardware or video games.
Have a PC?
Then you almost certainly have Windows. Heck, there are even versions of Microsoft Office for Apple products now.
The company is literally everywhere. And while we don’t tout riskier tech stocks very often in Wealth Watch, Microsoft is a unique story.
And it’s a company that’s right in the income-investing sweet spot.
A High-Growth Income Earner
As I just mentioned, the fast-paced, high-growth tech sector is not the first place most would look for a stock that could provide steady income for the long haul.
But Microsoft isn’t your average tech company. It’s in every household, like Clorox. And it has multifaceted, tech-focused revenue streams, like Amazon or Apple.
The nature of Microsoft as “everywhere tech” lends itself nicely to our income strategies.
For instance, we like to focus on stocks with low volatility, also known as low-beta stocks. A beta score of 1.00 or lower is perfect for us.
Well, MSFT is just a shade over the mark at a beta of 1.23. That can be forgiven when MSFT owners have also banked roughly 47% gains YTD.
And while MSFT continues to offer high-growth paydays thanks to innovations like its Azure cloud computing service, you can also expect to collect solid dividend payments and dividend growth.
As income-focused earners, we look for a yield of 2% or better.
MSFT pays a yield of 1.36%. Shy of our benchmark, yes. But compared with the scant 0.01% average you would collect from the rest of the tech sector, you can’t go wrong.
Bottom line: There are plenty of surprising ways to apply our income strategies in high-growth sectors. Microsoft is a prime example.
And as an income-focused investor, you’ll want to consider MSFT’s perfect recipe for long-term gains.
Here’s to growing your wealth,