3 Dividend Stocks Trading At 10% Discount Or More

Microsoft Corporation (NASDAQ:MSFT)

Source: Ycharts

Microsoft Corporation (NASDAQ:MSFT) is the best known and most important software company in the world. Along with its famous line of software products, Microsoft also offers various services such as servers (including cloud systems), business solutions (support and consulting), entertainment (Xbox) and other online services.

My interest in Microsoft Corporation (NASDAQ:MSFT) has grown, as it shows continuous growth potential with its cloud business services. Azure, the firm’s public cloud service, has established itself as the number-two player in the space behind Amazon. While reporting their Q3 2016 results, management mentioned that Azure revenue and compute usage more than doubled year-over-year. This represents a strong growth vector for the future.

The payout ratio seems high at 68.40% to justify a double-digit dividend growth rate. However, if you look at the cash payout ratio (44.06%), the company has plenty of room to continue its generous payout hikes. I’ve used a 10% dividend growth rate for the first ten years and drop it to 7% for the year after.

Here are the results of my calculations:

Source: Dividend Monk Toolkit Calculation Spreadsheet