1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 269
Microsoft Corporation (NASDAQ:MSFT) was the most popular stock among hedge funds in Q3 2022, as 269 funds in Insider Monkey’s database owned stakes in the company, compared with 258 in the previous quarter. The consolidated value of these stakes is over $61 billion. This strong hedge fund inclination makes it one of the best S&P 500 dividend stocks to buy.
Microsoft Corporation (NASDAQ:MSFT) offers a quarterly dividend of $0.68 per share for a dividend yield of 1.12%, as of January 24. It is one of the few tech companies that maintain a long dividend growth streak of 16 years.
BMO Capital maintained an Outperform rating on Microsoft Corporation (NASDAQ:MSFT) in January with a $267 price target. The firm noted that the company’s upside opportunities are ‘modestly’ higher than downside risk.
Fundsmith mentioned Microsoft Corporation (NASDAQ:MSFT) in its yearly 2022 investor letter. Here is what the firm has to say:
“Take the example of Microsoft Corporation (NASDAQ:MSFT) and Intuit. Microsoft shares are currently being valued at a P/E ratio of 25.0 times the consensus EPS estimate for the fiscal year ending June 2023. Meanwhile, Intuit is being valued at 28.4 times the non-GAAP consensus estimate for the fiscal year ending July 2023. Many investors and analysts may accept that Intuit is trading at a higher multiple given expectations of greater growth potential. However, Intuit removes share-based compensation from their non-GAAP EPS whereas Microsoft does not. Given that Intuit’s GAAP EPS guidance for the year ending 31st July 2023 is $6.92–$7.22, its non-GAAP guidance is $13.59–$13.89, and the consensus estimate for 2023 EPS is at $13.69, it seems clear that most sell-side analysts are accepting the company’s non-GAAP adjustments, which includes the removal of some $1.8bn of share-based compensation, in their estimates. If we include the impact of share-based compensation in Intuit’s 2023 EPS to make a more apples-to-apples comparison with Microsoft based upon GAAP EPS, Intuit’s 2023 EPS would be closer to $9, meaning that the shares would be trading at a multiple of about 43 times. I think investors and analysts may find a premium of 14% for Intuit over Microsoft (28.4 times versus 25.0 times) to be reasonable. I’m not so sure they are fully aware that Intuit shares are actually trading at a premium of 73% if share-based compensation is treated in the same manner between the two companies.”
Follow Microsoft Corp (NASDAQ:MSFT)
Follow Microsoft Corp (NASDAQ:MSFT)
You can also take a look at 11 Best Dividend Stocks For Rising Interest Rates and Dividend Aristocrats Ranked: Top 15 According To Hedge Funds
