Microsoft (MSFT 0.23%) shows no signs of slowing down from a growth standpoint. In this clip from "The Rank" on Motley Fool Live, recorded on July 13, Fool.com contributors Matt Frankel and John Bromels examine some of the reasons why the tech giant's stock may be very attractive to investors.
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Matt Frankel: I think the reason you buy all of these is with the goal of slightly outpacing the market over time, not necessarily that you think they're going to be home runs. I don't think anyone's buying Microsoft because they think they're going to double their money in two years, but these definitely have the capability. If the S&P does 10% annual returns over the next decade, these could do 10, or 11, or 12, and that's a totally reasonable cause to invest, I guess you would say.
John Bromels: Yeah. Plus, they all have some big advantages normally because of its size and the money. The amount of money that they can throw around to get into markets, to buy smaller companies that are getting into interesting markets that they think they would have an advantage in is staggering.
Frankel: Speaking of advantages, the third one we're going to talk about is Microsoft. This is the only one that we differed on. I had Apple (AAPL -1.92%) three and Microsoft four. You had Microsoft three and Apple four. Microsoft, to me, has a bit more of a competitive advantage over Apple in the sense that it has a near-monopoly in several different areas of its business and Apple really doesn't. I wouldn't call the iPhone a near-monopoly. I know plenty of people, myself included, who use Samsung phones. I know plenty of people who don't use Apple tablets. It's not a near-monopoly in the sense that, say, Outlook is for email. I don't know one person who doesn't use Outlook. By the silence, I assume that you use Outlook.
Bromels: I have to use Outlook. Yeah.
Frankel: Right, we have to. There are several areas of the Microsoft ecosystem that have near-monopolies in what they do. That's not even the most exciting reason to own Microsoft. It's for the cloud business, the Azure Cloud platform. That's about 1/5 of the cloud market, but that cloud market is expected to grow to $1.3 trillion in size by the end of the decade. If they can even maintain that 20% market share, that's an enormous revenue stream for Microsoft. Microsoft, by the way, is the highest dividend-paying stock out of these five.
Bromels: I just looked that up.
Frankel: With 1% dividend yield.
Bromels: Because when I said Apple, I said, wait a minute, I should check and see how big Microsoft is these days.
Frankel: Apple and Microsoft are the only two dividend-paying stocks on the list. But it surprised me. The thing that stood out to me when I was looking at all the statistics for this, Microsoft is down 27% from the highs. That's a pretty sharp drop for a company that has such a high competitive advantage. I think it was that that led me to rank it above Apple, is that it seems to be at more of a discount right now.
