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| Microsoft wordmark. (Photo credit: Wikipedia) |
Microsoft,
MSFT dividend machine for week of October 8, 2012
I have been searching
for dividend yield for this blog (and my research project) every week for nearly two years and only today, did
Microsoft show up. In the past either
their dividend was too low or their stock price too high to make the minimum
dividend yield criteria.
On Friday, MSFT closed
at $29.85. Their newly raised quarterly
dividend of $.23 (annualized at $.92) yields 3.08%. Basically that means if you can buy MSFT
under $30.00, MSFT will provide a greater than 3% yield.
Microsoft is no longer
a growth engine; it is now an income engine.
During the last four quarters, MSFT paid $.80 in dividends with
earnings during that same time period of $2.00. They have now raised the dividend every year
since they started paying a dividend in 2003.
MSFT has a D/E ratio of .18. By
all four measures, MSFT is a dividend machine.
DIVIDEND MACHINE
|
MSFT
|
Price when profiled
|
$29.85
|
Last 4 Qtrs Earnings
|
$2.00
|
Last 4 Qtrs Dividends
|
$0.80
|
Current Qtr Dividend
|
$0.23
|
Annualized Div Yield
|
3.08%
|
No. Years Div Increase
|
9
|
Debt/Equity ratio
|
16.00%
|
If you read this blog,
you know that I like to sell calls on my dividend stocks in order to boost my
income. This often times results in
losing a stock I really like, but as long as I lose the stock and reap a big
capital gain, I am willing to take that risk.
I believe there is always another stock to buy. I prove that by finding a dividend machine every week. Some companies, like MSFT just barely
meet the minimal yield criteria, but these stocks often times offer the
opportunity to boost income by selling covered calls.
While, I like a 10
percent gain when I sell a call and it is exercised, I noticed a call on MSFT
on Friday that you might consider. Here
are the details of a December 2012 call with a strike price of $32 and a
premium of $.32.
CALL OPTION
|
MSFT
|
Strike Price
|
$32.00
|
Cost Basis
|
$29.85
|
Call Premium
|
$0.32
|
Dividend
|
$0.23
|
Gain in $ if assigned
|
$2.47
|
Call Yield
|
1.00%
|
Gain Yield
|
7.72%
|
Total Gain Yield
|
8.44%
|
MSFT is my dividend
machine for this week, October 8, 2012.
Very Truly Yours,
TheMoneyMadam
