Microsoft Corp. (NASDAQ: MSFT) is rewarding its shareholders once again with a quarterly dividend of $0.83, payable on Thursday, March 13. That is in line with the prior payout.

While the company has pushed heavily into the artificial intelligence (AI) space, the dividend payment underscores the management’s commitment to continuing to deliver consistent value to investors.

Why Investors Like Dividends

Investors favor dividend stocks for two main reasons. The first is that they offer enticing total return potential. Total return is a comprehensive measure of investment performance that includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation. It is one of the most effective ways to boost the prospects of overall investing success.

Dividend stocks can also provide investors with a steady, reliable stream of passive income. Passive income is money that is earned with little to no ongoing effort, usually from assets that generate cash flow. This income can come from a variety of sources, including stock dividends. Generating passive income is a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

Microsoft’s Dividend

Microsoft has hiked its dividend annually for about 20 years and appears to be on the path to becoming a Dividend Aristocrat. A decade ago, the payout was $0.31 per share. That is a compound annual growth rate of more than 10% in that time. The current dividend yield is 0.8%, which is not far off the average yield of its industry and sector. However, it is higher than the yields of most of the competitors named below.

Note that Microsoft’s share price has grown by more than 826% in the past 10 years as well, offering investors plenty of growth along with the income.

Microsoft, the Company

This tech giant develops and supports software, services, devices, and solutions worldwide. It sells its products through original equipment manufacturers, distributors, and resellers, as well as directly through digital marketplaces, online, and retail stores.

The Productivity and Business Processes segment offers Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, Microsoft Viva, and Microsoft 365 Copilot. Its Office consumer services include Microsoft 365 consumer subscriptions, Office licensed on-premises, and other services. This segment also provides LinkedIn, as well as dynamics business solutions such as Dynamics 365.

The Intelligent Cloud segment offers server products and cloud services, such as Azure and other cloud services; SQL and windows server, visual studio, system center, and related client access licenses, as well as Nuance and GitHub; and enterprise services including enterprise support services, industry solutions, and nuance professional services.

The More Personal Computing segment offers Windows, including Windows OEM licensing and other non-volume licensing of the Windows operating system; Windows commercial comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; and Windows Internet of Things; and devices, such as Surface, HoloLens, and PC accessories. Additionally, this segment provides gaming, which includes Xbox hardware and content, Xbox game pass and other subscriptions, cloud gaming, advertising, and other cloud services. Search and news advertising services include Bing, Microsoft News, and Edge.

Its headquarters are in Redmond, Washington, which is in the Seattle area. The company was founded in 1975 by Bill Gates and Paul Allen and became highly influential in the rise of personal computers. Microsoft went public in March of 1986. Now it competes with or is similar to, among others:

• Alphabet Inc. (NASDAQ: GOOGL)
• Amazon.com Inc. (NASDAQ: AMZN)
• Apple Inc. (NASDAQ: AAPL)
• International Business Machines Corp. (NYSE: IBM)

The FTC has initiated a broad antitrust probe of Microsoft. The company’s deal with OpenAI just received the nod from a U.K. watchdog. It has launched its Dragon Copilot for healthcare documentation. It is poised to shut down Skype, and it has decided not to renew some data center leases.

Microsoft, the Stock

This Magnificent 7 stock has grown over 141% in the past five years, outperforming the S&P 500. Year to date, though, it has retreated about 9%, narrowly underperforming the Nasdaq. Shares hit a multiyear high of $468.35 last summer, but the mean price target is up at $506.25. That means that Wall Street sees 33% or so upside in the coming year. The consensus recommendation is to buy shares, including 14 Strong Buy recommendations. Stifel just reiterated its Buy rating.

The stock remains popular with hedge funds. Institutional investors hold more than 74% of the shares. BlackRock, State Street, and Vanguard have notable stakes. More than 53 million shares, or less than 1% of the float, are held short. Note that an officer parted with more than $3 million worth of shares in December.

Microsoft Price Prediction and Forecast 2025-2030

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