Buy Microsoft Corporation (MSFT) Regardless of Dividend Hikes


Microsoft Corporation (NASDAQ:MSFT) remains on the best tech stocks to buy in 2018. The company has had a phenomenal year, clocking about $100 billion revenue in the fiscal year 2018. The revenue in the year was a 14% jump when compared to the previous year. Microsoft’s operating income also increased by 21% and adjusted EPS by 18%. The biggest growth came in the Intelligent Cloud division (23%), while the Personal Computing division increased by 17%.

Infographic: Microsoft on Track to Hit $20 Billion Cloud Revenue Target | Statista You will find more infographics at Statista

Microsoft Dividend Hike?

Analysts are also bullish about a dividend hike at Microsoft. On September 17, Stifel said in a report that Microsoft could announce a 10%-15% increase in its dividends on September 18. The investment firm believes so because the company has announced a dividend increase on the third Tuesday of every September for the past eight years. Dividend increase or not, we believe Microsoft shares should be bought for long term gains.

Stifel reiterated its price target of $118 for Microsoft. The firm believes that Microsoft’s performance is “sufficient” to implement its plan to return about $20 billion to shareholders. Stifel increased its price target for Microsoft to $118 in July. The firm’s analyst Brad Reback said in that report that MSFT continues to “fire on all cylinders”. Reback said Microsoft is benefitting from favorable IT environment, the “Win10 replacement cycle” and strong expense discipline.

Microsoft’s Increasing Penetration in Machine Learning

Microsoft Corporation (NASDAQ:MSFT) is becoming a market leader in the domain of Cloud, machine learning and AI. The company recently acquired San Francisco-based startup Lobe. Lobe offers solution to help customers use visual drag-and-drop interface to develop deep learning (DL) tools. Lobe’s platform and products have the capability to make very accurate predictions based on data inputs from microphones, cameras, among other mechanisms.

Microsoft’s Successful Acquisition of LinkedIn

Microsoft Corporation (NASDAQ:MSFT) has also started monetizing its LinkedIn deal, which was a surprise for the Wall Street as MSFT spend $26.2 billion in the deal. LinkedIn accounted for a whopping $1.3 billion in a single quarter earlier this year. LinkedIn is based on a subscription model. The employment platform has over 500 million members as of 2017.

Microsoft stock is also among the list of most favorite stock of hedge funds compiled by Goldman Sachs. The stock is owned by 76 of the VIP hedge funds tracked by Goldman, as of August 2018.

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Author does not have investment in stock discussed in this article.

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