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Microsoft stock is among the best picks to ride out fall volatility

Microsoft stock is among the best picks to ride out fall volatility

Microsoft (NASDAQ: MSFT) stock has displayed outstanding performance in the past few years despite the market uncertainty and wild broader index swings amid pandemic. In addition, the company’s strategy of moving its portfolio towards the cloud and data center helped it in generating sustainable double-digit revenue growth in the past couple of quarters.

Shares of software company soared almost 30% so far this year, accelerating twelve months gains to 50%. Microsoft stock price currently trades around $200, down from a 52-weeks high of $230 a share. In addition to share price gains, Microsoft also rewards investors through hefty dividends.

MSFT Microsoft Corporation daily Stock Chart
Microsoft stock performance. Finviz chart

The company has raised dividends in the past seventeen consecutive years, with a dividend growth rate of more than 10% in the past five connective years. Microsoft has recently raised the quarterly dividend by 9.8% to $0.56 per share.

Its financial numbers are backing dividends and share price gains. The company has generated $38 billion in fourth-quarter revenue, representing a growth of 12% year over year. Its Intelligent Cloud business, which is the largest revenue contributing segment, generated 17% year-over-year growth to $13.37 billion.

“The last five months have made it clear that tech intensity is the key to business resilience. Organizations that build their own digital capability will recover faster and emerge from this crisis stronger,” said Satya Nadella, chief executive officer of Microsoft.

“We are the only company with an integrated, modern technology stack – powered by cloud and AI and underpinned by security and compliance –  to help every organization transform and reimagine how they meet customer needs,” Satya Nadella added.

The company’s cash generation potential is strong enough to sustain dividend growth along with investments in growth opportunities. Its operating cash flows came in at $18 billion compared to dividend payments of only $3.8 billion. The company expects to generate double-digit top and bottom-line growth in fiscal 2021.  

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Siraj Sarwar

Siraj is a finance writer based in Saudi Arabia with a strong understanding of and passion for the stock market, cryptocurrency, economics, and finance. He has worked for international clients for many years on several projects related to the stock market, equity research, accounting, and finance. Siraj is a published financial analyst on some of the largest finance websites.