Sunday, October 7, 2012

Microsoft, MSFT took a long time to show up as a dividend machine!

Microsoft wordmark.
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
Enhanced by Zemanta