The online trading brokerage has made trading stocks more accessible for the common person. But people trade with different objectives. Some look for short term gains while others favor long term objectives. Generally people do want growth and security, but some can accept more risk for the sake of growth. A steady income from stocks helps, and dividends are the primary method of companies rewarding people who've bought their stocks.
Why Microsoft Could Be Offering a Dividend Raise
Microsoft ($MSFT) is heading for a dividend raise in 2019 for its shareholders, according to Motley Fool’s Ashraf Eassa. The analyst believes the company is one of the most attractive options out there for investors looking for dividend growth. Though the company won't necessarily make you a rich person in a short time period when you invest in it, Eassa points out that it does provide a significant appreciation of capital in the long run. The growing dividend only adds to the attraction.
There are many factors going for it, such as its exposure to many growth markets and its competitive positioning in those markets. And if you look through its past, it has been offering consistent growth in its dividend.
Factors Pointing to a Potential Dividend Hike
Eassa doesn't give any prediction, but strongly reckons that there are various factors going for a dividend rise this year.
For one, Microsoft has a successful business running that can easily support annual dividend hikes. And the company's history proves it. Eassa quotes the following chart:
Granted, history cannot be the only indicator for how the future could be. There are other factors such as the recent performance of the company to take into account. That shows if the company has the potential to raise the dividend it offers. Taking that into consideration, it still is positive for investors. The company's revenue in the 2018 fiscal climbed from $96.57 billion the previous year to $110.36 billion. There was a surge in the operating income of the company too last year, from $29.03 billion the previous year to $35.06 billion in the same period in 2018. If there was something that was down, it was the net income but that was, Microsoft claims, the result of a Tax Cuts and Jobs Act-related net charge of $13.7 billion.
Free Cash Flow on the Rise Too
The company's free cash flow has also been moving up during the past 12 months. This is a very significant statistic in terms of dividend raise, since dividend payments are ultimately funded by free cash flow, as the following Motley Fool chart shows:
The dividend raise may eventually come only by December 2019, Eassa reckons, since that's how it has historically been doing it. Its previous dividend increase was on the 13th of December, 2018.
So that's one stock to look out for. To get more information and resources for effective stock trading, get in touch with an online trading brokerage that offers advanced trading features. TradeZero offers free trading software and other features for effective trading. Get in touch with us at 1 954-944-3885 or email firstname.lastname@example.org.
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