Definitive Analysis
Definitive Analysis

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Microsoft Corporation (MSFT)

Company Dividend Discount ModelIndustry: Software - InfrastructureSector: Technology

Valuation Snapshot

Stable Growth$329.67 - $874.52$504.10
Multi-Stage$225.45 - $246.33$235.70
Blended Fair Value$369.90
Current Price$517.95
Upside-28.58%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2025202420232022202120202019201820172016
DPS9.73%9.32%3.232.922.652.432.212.031.851.701.591.47
YoY Growth--10.62%9.95%9.18%9.77%9.14%9.60%8.76%7.21%7.62%11.37%
Dividend Yield--0.62%0.68%0.84%1.04%0.79%0.96%1.33%1.47%2.13%2.56%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)104,912.00
(-) Cash Dividends Paid (M)24,677.00
(=) Cash Retained (M)80,235.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)20,982.4013,114.007,868.40
Cash Retained (M)80,235.0080,235.0080,235.00
(-) Cash Required (M)-20,982.40-13,114.00-7,868.40
(=) Excess Retained (M)59,252.6067,121.0072,366.60
(/) Shares Outstanding (M)7,465.007,465.007,465.00
(=) Excess Retained per Share7.948.999.69
LTM Dividend per Share3.313.313.31
(+) Excess Retained per Share7.948.999.69
(=) Adjusted Dividend11.2412.3013.00
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$329.67$504.10$874.52
Upside / Downside-36.35%-2.67%68.84%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)104,912.00111,731.28118,993.81126,728.41134,965.76143,738.53148,050.69
Payout Ratio23.52%36.82%50.11%63.41%76.70%90.00%92.50%
Projected Dividends (M)24,677.0041,136.4359,631.3380,356.77103,524.57129,364.68136,946.89

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)37,351.9037,705.9538,059.99
Year 2 PV (M)49,163.9450,100.3751,045.64
Year 3 PV (M)60,156.2461,883.1163,642.71
Year 4 PV (M)70,370.0273,076.2675,859.80
Year 5 PV (M)79,844.6983,701.2287,705.34
PV of Terminal Value (M)1,386,101.571,453,050.801,522,562.33
Equity Value (M)1,682,988.361,759,517.701,838,875.82
Shares Outstanding (M)7,465.007,465.007,465.00
Fair Value$225.45$235.70$246.33
Upside / Downside-56.47%-54.49%-52.44%

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