Both Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) have seen their shares fall sharply recently. But Apple stock has been hit particularly hard, declining 23% since October 1 -- a period during which Microsoft and the S&P 500 fell about 7% and 8%, respectively.

This recent volatility prompts an interesting dilemma -- and possibly an opportunity. Does Apple's outsized decline make the stock a better buy than Microsoft? This is a particularly timely question for dividend investors, as both of these tech stocks pay meaningful, growing dividends.

Is it time for investors to pick up shares of one of these dividend stocks?

A pile of cash

Image source: Getty Images.

Microsoft

Forward Dividend Yield

Payout Ratio

Trailing-12-Month EPS Growth (YOY)

1.8%

41%

24%

Data source: Yahoo! Finance and Reuters. YOY = year over year.

Everything seems to be going right for software giant Microsoft recently. Revenue and earnings per share surged 19% and 36% year over year, respectively, in the company's most recent quarter as Microsoft's cloud-based products helped drive strong growth and operating leverage. The software company's momentum is further highlighted by its 24% year-over-year earnings-per-share growth over the trailing-12-month period. 

Further, with the help of Microsoft's recent 9.5% dividend increase and a lower stock price, the software giant has a robust forward dividend yield (expected annual per-share dividend payments as a percentage of a company's stock price) of 1.8%.

Looking ahead, investors should expect Microsoft's dividend to continue growing. Paying out just 41% of its earnings in dividends, there's plenty of room for dividend growth. In addition, the key catalysts for Microsoft's business -- namely its various commercial cloud products -- are still growing rapidly. Commercial cloud revenue increased 47% year over year to $8.5 billion (29% of total revenue) in Microsoft's first quarter of fiscal 2019. Continued growth in Microsoft's commercial cloud products should help fuel more strong earnings growth.

Apple

Forward Dividend Yield

Payout Ratio

Trailing-12-Month EPS Growth (YOY)

1.7%

27%

29%

Data source: Reuters and Apple's fourth-quarter financial statements. YOY = year over year.

On a trailing-12-month basis, Apple's business appears to be on fire. Revenue during this period is up 16%, and earnings per share rose 29%. This growth was helped primarily by a thriving iPhone business, which saw revenue rise 18% year over year to a whopping $167 billion. In addition, 24% and 35% year-over-year growth in services and other products revenue, respectively, were meaningful catalysts as well. Together, these segments accounted for about 20% of revenue.

But it's Apple's future potential that has some investors worried. The company's guidance for its first quarter of fiscal 2019 implies just 1% to 5% year-over-year revenue growth. Still, Apple stock manages to look attractive even with its underwhelming first-quarter outlook. The difference is made in valuation, where Apple handily beats Microsoft. Thanks to the stock's decline recently, Apple has a price-to-free cash flow ratio of just 12.3 -- wildly conservative for a market leader with impressive pricing power. This compares to Microsoft's premium valuation, as evidenced by its price-to-free cash flow ratio of 26.

Adding in Apple's meaningful dividend yield of 1.7% and its very low payout ratio of just 27%, the iPhone-maker edges out Microsoft as the better dividend stock -- despite what could prove to be a year of slow growth for Apple's business.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Microsoft and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.