Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

3M Co (MMM): Microsoft Corporation (MSFT)’s Buyback Headlines the Dow (.DJI)’s Gains

Although we don’t believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes — just in case they’re material to our investing thesis.

A slower day for stocks hasn’t kept the Dow Jones Industrial Average from keeping up its run higher. As of 2:15 p.m. EDT, the blue-chip index has gained about 45 points. Stocks are mostly up across the board despite a downbeat day from the health care and financial sectors, but Microsoft Corporation (NASDAQ:MSFT) and other tech stocks are pulling their weight for the market’s gains. Let’s catch up on what you need to know.

Microsoft shows investors the green

Microsoft Corporation (NASDAQ:MSFT) isn’t one of the Dow’s top members today, with shares up only about 0.5%, but it’s sure making investors happy as Wall Street continues to digest the company’s impending leadership shakeup. The company today increased its dividend by $0.05 to $0.28 per share, and it sweetened the deal by giving the green light for a stock buyback program of up to $40 billion.

Microsoft Corporation (NASDAQ:MSFT)

Investors are always happy about dividend increases, and it’s not exactly bad timing by Microsoft Corporation (NASDAQ:MSFT) for a buyback: Shares are off their 52-week high by about 10%. But it’s also a way to keep some of the focus off of the company’s transition in a time when some investors are unsure of the firm’s future.

Can Microsoft Corporation (NASDAQ:MSFT) be a good option for dividend investors? The tech stock might be beaten down in hardware and mobile circles, but it still maintains a dominant presence in business, particularly through software such as its Microsoft Office suite. The company’s business division was its top-selling unit in the most recent fiscal year, exceeding the sales of its next-largest segment, its server and tools division, by about 20% and posting modest year-over-year revenue growth. Both of its top two segments, responsible for more than 50% of total sales, have shown growth recently, and Microsoft still maintains a relatively low dividend payout ratio of just 34%.

This company in transition may not be at its most stable for a while, but dividend investors needn’t worry about Microsoft Corporation (NASDAQ:MSFT)’s weak mobile presence, given its dominance in the business sphere.

3M Co (NYSE:MMM) is also advancing today, with shares of the conglomerate up 0.7%. The stock has had a good year for investors so far, up more than 25% year to date. However, 3M’s financial performance recently has been lackluster at best. It’s folly to expect a broad conglomerate like this to post growth, but while the firm’s sales picked up more than 2% over the first six months of the year, operating profit fell slightly year over year for the same time frame.

Blame the company’s third-best-selling unit — its electronics and energy division, which saw operating profit nosedive by 16% in the most recent quarter. 3M Co (NYSE:MMM) has posted decent results elsewhere in the company — its industrial department, its largest division by sales, saw revenue climb 6% year over year in the most recent quarter — but the firm will need to do a better job posting across-the-board profit growth in future quarters in order to sustain its run.


The article Microsoft’s Buyback Headlines the Dow’s Gains originally appeared on and is written by Dan Carroll.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends 3M. The Motley Fool owns shares of Microsoft. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!