1 Superb Tech Dividend Stock to Buy and Hold Forever

Core Viewpoint - Microsoft is a strong candidate for dividend investors, showcasing solid financial performance and growth potential in the technology sector, particularly in cloud computing and AI [1][2]. Group 1: Financial Performance - Microsoft achieved a revenue of $70.1 billion and a net income of $25.8 billion in Q3 of fiscal year 2025, reflecting year-over-year growth of 13% and 18% respectively [2]. - The company's cloud-computing unit, Azure, reported a revenue increase of 33% compared to the previous year [3]. - Microsoft generated $69.4 billion in free cash flow over the trailing 12-month period, indicating strong cash generation capabilities [7]. Group 2: Dividend Growth Potential - Over the past decade, Microsoft has increased its dividend by 167.7%, with a current cash payout ratio of 29.4%, suggesting room for further dividend hikes [9][10]. - The company is positioned to sustain and potentially increase its dividend payouts without significantly impacting its reinvestment in growth [10]. Group 3: Competitive Position and Market Outlook - Microsoft is gaining ground on Amazon in the cloud-computing space, with both companies expected to compete vigorously due to substantial growth opportunities in cloud and AI [5]. - The company's strong brand and internal culture of innovation are key competitive advantages that should support its long-term performance [5][6]. - Microsoft holds the highest credit rating possible, indicating robust fundamentals and a safe long-term investment profile [8]. Group 4: Valuation Considerations - Microsoft trades at a forward price-to-earnings ratio of 33.4, which is above the S&P 500 average of 22.3, but is justified by its leadership in fast-growing markets [11]. - Despite potential concerns regarding economic disruptions, Microsoft has a history of resilience and is expected to continue delivering superior returns [12].