How to Buy Microsoft Stock (MSFT)

In recent years, the company has made several notable investments to drive future growth. In 2023, it closed an almost $70 billion deal for video game maker Activision to bolster its Xbox entertainment platform.

It also agreed to make a multiyear, multibillion-dollar investment in artificial intelligence (AI) company OpenAI to implement its technology into the company's Office, Azure, and Bing platforms.

Here's a step-by-step guide to buying Microsoft shares and some factors to consider before investing in the technology stock.

How to buy Microsoft stock

To buy shares of Microsoft, you must have a brokerage account. If you still need to open one, these are some of the best-rated brokers and trading platforms. Here's a step-by-step guide to buying Microsoft stock using the five-star-rated platform Fidelity.

Fidelity makes it easy to buy stocks. Its website also offers a video tutorial and a step-by-step guide. The screenshot below shows how to place a stock trade with Fidelity:

Should I invest in Microsoft?

Before you buy Microsoft shares, you need to determine whether the company's stock is a good investment. Here are some reasons you might want to consider buying Microsoft stock:

• You want to own a small piece of one of the world's largest technology titans.
• You understand how Microsoft makes money.
• You want to own individual stocks.
• You've thoroughly researched Microsoft and plan to continue following the company.
• You think the company can continue growing its profits at an above-average pace.
• You want to invest in one of the most financially robust companies in the world.
• You think the Activision deal will help grow Microsoft's Xbox platform.
• You believe the company's investment in OpenAI will give it a competitive edge in the AI age.
• You don't need a lot of dividend income right now, but you believe Microsoft will continue increasing its payout at a healthy pace in the years to come.
• You believe Microsoft can outperform the S&P 500 over the long term.
• You use Microsoft's products and want to invest in the company making them.
• You understand the risks of investing in Microsoft, including that its shares could lose value.

Potential Microsoft investors must also consider why they might not want to buy shares. Here are some factors to contemplate:

• You're concerned about AI and unsure whether Microsoft's investment in OpenAI will create shareholder value.
• You don't like big tech companies and worry they're becoming too powerful.
• You're unsure whether Microsoft's acquisition of Activision will create value for shareholders.
• You need a higher-yielding dividend than Microsoft currently offers.
• You're unsure whether Microsoft can beat the S&P 500 over the long term.
• You don't want to own shares in a company founded by Bill Gates.
• You don't like Microsoft's products.
• You're younger and want to invest in a company earlier in its growth cycle than Microsoft, which has been around for almost a half-century.

Is Microsoft profitable?

Profit growth helps drive stock price appreciation over the longer term. It's an ideal area for beginning investors to focus on before buying shares of any company.

Microsoft is enormously profitable. The technology giant generated $245.1 billion of revenue in its 2024 fiscal year (up 16%) and $109.4 billion in operating income (up 24%). The company has increased its earnings sharply over the years, helping drive strong stock price appreciation:

Microsoft's cloud services division was a notable growth driver at 19% revenue growth in its fiscal fourth quarter. And the company sees more growth ahead. It expects its revenue and earnings to be higher in its 2025 fiscal year, driven in part by its ability to capitalize on AI.

Does Microsoft pay a dividend?

Microsoft started paying a dividend in 2003. However, it doesn't have a high dividend yield compared to other stocks. (Microsoft's yield was less than 0.8% in mid-2024 compared to below 1.5% for the S&P 500.)

Microsoft held the title of world's top dividend payer in 2023, paying out more than $20 billion in cash to its shareholders. The company has steadily increased its payout over the years, notching its 14th consecutive year of increasing the dividend in 2023, when it boosted the payout by 10%.

ETFs with exposure to Microsoft

Instead of actively buying shares of Microsoft directly, you can passively invest in the technology company through a fund holding its shares. Microsoft is one of the largest traded companies by market capitalization and is a widely held stock.

Microsoft is in several stock market indexes, including the Dow Jones Industrial Average and S&P 500 Index. As a result, index funds and exchange-traded funds (ETFs) that benchmark their returns against those indexes hold Microsoft stock. According to ETF.com, 544 ETFs held 706.9 million shares of Microsoft as of mid-2024. The ETFs with the most shares were:

As one of the world's largest companies by market cap, Microsoft carries a meaningful portfolio weighting in the biggest ETFs. Among the biggest ETFs, the Invesco QQQ Trust (NYSEMKT:QQQ) has the largest portfolio weighting to Microsoft, making it a potential option for investors seeking to gain exposure to Microsoft through a passive ETF investment.

Another relatively large ETF with an even greater portfolio weighting of Microsoft stock is the Technology Select Sector SPDR Fund (XLK +0.34%). Microsoft has a roughly 22% portfolio weighting in the fund, providing another possible way to gain meaningful exposure to Microsoft through a passive ETF investment.

Will Microsoft stock split?

As of mid-2024, Microsoft had yet to announce an upcoming stock split. However, the company has completed several stock splits over the years:

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