The reality for investors seeking technology exposure is that most companies in this sector are very pricey from a valuation standpoint. This is certainly true for Microsoft Corporation (NASDAQ:MSFT). That being said, of the group, Microsoft remains on the top of my list in terms of long-term buy-and-hold companies to add to a portfolio as a core holding for retirement.
Of the FAANG group of large cap blue-chip technology stars dominating the NASDAQ, I think Microsoft’s growth profile is superior to its peers. The company’s cloud business is growing at a faster rate than its peers and is a key driver for the company’s Return on Equity (ROE) of more than 40%, a truly incredible statistic. From a price to growth perspective, Microsoft’s valuation is easier to justify at these levels than its peers. This is a checkmark in my book.
Microsoft’s small but meaningful dividend has grown over time and has proven to be attractive for investors who got in at lower levels. Should Microsoft’s share price drop by any meaningful margin in the near term, I would encourage all investors of all risk profiles to consider adding position. As of right now, I’m on the sidelines waiting for another potential market-wide selloff to build a position at lower levels, knowing full well shares of Microsoft are unlikely to ever be considered cheap by normal metrics.
Invest wisely, my friends.
