Hey, Zach here!
Last week, we had fantastic earnings from top companies like Microsoft, Meta, HESM, Visa, Apple, etc. However, we ended the week with a large sell off. Will the summer rally continue?
Today’s topics:
Microsoft Stock Analysis
Top Dividend Increases This Week
New Earnings This Week
The Key Story
Why You Should Own Microsoft Stock & Hold Forever – MSFT Stock Analysis
💻 My Stock Research Tool: https://www.dividenddata.com/
1. Earnings at a Glance
Q4 2025 Revenue: $76.4 billion (+3.6% vs. analysts)
Non-GAAP EPS: $3.65 (+8.3% vs. analysts; all-time high)
After-hours Move: +8.3% on the beat
2. Cloud & AI: The Growth Engine
Q4 Microsoft Cloud Revenue: $46.7 billion (+27% YoY)
Includes Azure, Microsoft 365, Dynamics 365
Azure Alone: $75 billion TTM (Q4 2025 +39% YoY)
Outpaces AWS and Google Cloud
Fueled by AI infrastructure demand (OpenAI partnership)
Scale Milestone:
Azure now >26% of total revenue ($75 billion+ in FY 2025)
Model:
At 39% growth → Azure → $200 billion+ by 2028
Even 30% growth → Azure → $100 billion+ by 2026
3. Dividend Growth & Capital Returns
10-Year CAGR: 10.35% dividend increase, year-in, year-out
Payout Ratios:
Free cash flow: 29%
Net income: 24%
Buybacks & Reinvestment: Balanced between returning cash and funding acquisitive, high-ROI growth
4. Valuation Perspective
Forward P/E: ~33× on next-year EPS estimates (~13% growth)
Long-Term P/E Trajectory:
If MSFT sustains 13–17% EPS growth through 2029 → P/E falls to ~21× on ’29 earnings
Key Insight: You’re paying for durable, compounding growth—cloud and AI adoption aren’t done ramping
5. Capital Expenditure & Future Growth
Q4 2025 CapEx: $24.2 billion; Q1 2026 guidance: $30 billion
Why It Matters:
Heavy investment in AI/data centers temporarily mutes free cash flow growth
Builds the foundation for future revenue and earnings growth
6. My Take & Positioning
I hold MSFT as my #1 position (24% of my portfolio) because:
Best-in-class cloud/AI growth runway
Reliable dividend growth backed by world-class free cash flow
Attractive long-term valuation when you price in durable earnings acceleration
Bottom Line: Microsoft’s AI-powered Azure expansion isn’t just a catalyst—it’s redefining the company’s growth trajectory. If you agree that cloud-infrastructure demand will keep compounding, MSFT belongs in any dividend-growth portfolio you intend to hold for decades.
Disclosure: I am long MSFT. Use my favorite research tool to run these numbers yourself: https://www.dividenddata.com/
Dividend News
🚀 Top Dividend Raises This Week
One of my top high yield dividend growth stocks, HESM, just raised it’s quarterly dividend this week. That’s an increase every quarter!
Track your dividends and get breaking news on increases, decreases, and special dividends with DividendData.com.
Earnings News
Upcoming Earnings This Week
Multiple top stocks report this week:
PFE - Pfizer
CAT - Caterpillar
AMD - Advanced Micro Devices, Inc.
PLTR - Palantir Technologies
HIMS - Hims & Hers Health
SMCI - Super Micro Computer, Inc.
UBER - Uber Technologies
MCD - McDonalds
DIS - The Walt Disney Company
SHOP - Shopify
OXY - Occidental Petroleum
O - Realty Income
LLY - Eli Lilly
CELH - Celsius Holdings
How did you like today’s newsletter?
📅 Keep Investing. Stay informed.
– Zach
Founder, Dividend Data
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Disclaimer: Dividend Dividend (Dividend Data LLC) is not a professional financial service. All materials released from Dividend Data (Dividend Data LLC) are for educational and entertainment purposes. Dividend Data (Dividend Data LLC) is not a replacement for a professional's opinion. Contributors to the Dividend Data (Dividend Data LLC) might have equities mentioned in the newsletter