When looking for growth and safety in today’s volatile market, many investors are now looking at large technology names like Microsoft Corporation (NASDAQ:MSFT) as the way to go. They see this as a strategy to battle said volatility right now and hold on to the long term with a portfolio staple. Microsoft is one of those core companies with both a long-term track record of impressive growth and a durable competitive advantage (moat), which is unparalleled. This company also has a great long-term growth trajectory from its current state, making it a long-term winner for any portfolio.
Of note, Microsoft’s Return on Equity (ROE) of more than 40% is unheard of amongst most companies. This ROE is generated via a growth-oriented business model which incorporates both organic growth from the company’s core businesses but also acquisition-based growth, particularly in the cloud-computing sector. This company has won a ton of business in the cloud computing space and is well-positioned to continue to grow its market share, driving the company’s growth potential over the long term.
Microsoft stock is not cheap. Investors focused on dividend income may be dismayed at the company’s miniscule dividend yield. That said, the growth Microsoft has been able to provide in cash flows has supported solid dividend growth in share buybacks - two key investing factors which are likely to continue due to one of the sector’s best balance sheets and a management team which has been a stellar steward of investor capital over the long term.
Invest wisely, my friends.
