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3 Reasons to Hold On to Microsoft's Stock

By Chuck Saletta – Feb 25, 2014 at 8:03PM

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Reasonable valuation, healthy balance sheet, and a well-covered dividend with room to continue growing.

Microsoft (MSFT -0.80%) is a selection for the real-money Inflation-Protected Income Growth portfolio. In this brief video, portfolio manager Chuck Saletta offers three reasons he's holding on to Microsoft's stock despite the 39% rise since he bought those shares a little more than a year ago.

Why dividends rule
A key reason Microsoft made the cut as an iPIG selection is one of the dirty secrets that few finance professionals will openly admit: Dividend stocks as a group typically outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best.

With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

 

Summary:

  • Reasonable valuation, with a market cap in line with a fair-value estimate.
  • Healthy balance sheet, with a debt-to-equity ratio of around 0.3 and a "AAA" debt rating.
  • Covered and growing dividend with a 36% payout ratio and an emerging trend of dividend hikes.

To follow the iPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the iPIG portfolio, simply. click here.

Chuck Saletta owns shares of Microsoft. The Motley Fool owns shares of Microsoft. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Microsoft Stock Quote
Microsoft
MSFT
$245.42 (-0.80%) $-1.98

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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