Microsoft (NYSE: MSFT) stock is well set to outpace its competitors and the broader market in fiscal 2020 after stronger than expected performance in 2019. Its future fundamentals and business strategies are suggesting strong returns for investors in the form of dividends and share price appreciation.
It is the second-largest company with a market capitalization of $1.18 trillion, down slightly from Apple’s market cap of $1.22 trillion.
Microsoft is considered as one of the best company for defensive investors. It has raised dividends in the past 16 successive years. Microsoft returned close to $7.9 billion to investors in the first quarter of 2020. This represents a 28% increase compared to the past year period.
Microsoft Stock Is Set to Shine in 2020
Microsoft stock price bounced sharply in 2019; the stock is extending the momentum into the New Year. Its shares are up 52% in the past twelve months.
The stock price is currently trading around an all-time high of $154. Despite a sharp rally, MSFT shares are trading at attractive valuations. It is trading around 28 times to earnings with strong future fundamentals.
The company has been enhancing investor’s sentiments through double-digit revenue and earnings growth. Its revenue grew 14% year over year in the first quarter to $33.1 billion.
Moreover, operating income came in at $12.7 billion, up 27% from the past year period. The company expects to generate similar growth in the following quarters, thanks to strong growth from cloud markets.
“It was a strong start to the fiscal year with our commercial cloud generating $11.6 billion in revenue for the quarter, up 36% year over year,” said Amy Hood, executive vice president, and chief financial officer of Microsoft.
Cash Returns are Safe
Microsoft is likely to offer higher cash returns in fiscal 2020 compared to the past year. It has recently raised the quarterly dividend by 11%, while market analysts expect similar dividend growth in the second half of 2020. The cash flows are also offering a room for a dividend increase. Overall, Microsoft stock is perfect for both dividend and value investors.