Why MSFT Stock Is A Shareholder's Paradise?

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Over the past ten years, Microsoft stock (NASDAQ: MSFT) has granted an astounding $364 billion back to its shareholders through tangible cash disbursements in the form of dividends and buybacks. This shareholder-friendly approach continues to gain momentum in 2025, with the stock delivering over 20% returns year-to-date as of September, outpacing broader market indices.

Despite strong financial performance, Microsoft faces ongoing political scrutiny, as evidenced by recent comments from U.S. President Donald Trump calling for the company to fire Lisa Monaco, Microsoft’s global affairs president, who previously served in Democratic administrations. This development, part of broader political tensions following the indictment of former FBI Director James Comey, highlights the regulatory and political environment that large tech companies navigate while maintaining their focus on shareholder returns.

Microsoft’s commitment to rewarding investors has been further reinforced through recent capital allocation decisions, including the announcement of a substantial $60 billion share buyback program initiated in September 2024 that extends into 2025.

Additionally, the company demonstrated its confidence in sustained cash generation by declaring a 10% dividend increase in September 2025, raising the quarterly dividend from $0.83 to $0.91 per share – marking the latest in a series of consecutive dividend raises that underscore Microsoft’s financial strength.

During the first half of fiscal 2025 alone, Microsoft returned $18.7 billion to shareholders through dividends and share repurchases, with $9.0 billion distributed in Q1 and $9.7 billion in Q2, reflecting the company’s disciplined approach to capital deployment while maintaining robust reinvestment in growth initiatives. Let’s delve into some figures and assess how this distribution effectiveness compares to the market’s top capital-return entities.

Interestingly, MSFT has delivered the second-largest sum to shareholders in history.

MSFT Stock Shareholder Returns

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That’s a nice overview, but assessing a stock from an investment point of view encompasses much more. That is precisely what the Trefis High Quality Portfolio accomplishes. It aims to minimize stock-specific risk while allowing for upside potential. In fact, it has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 91% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – What’s Behind The 2x Rise In IBM Stock?

Why Should You Be Concerned About Shareholder Returns?

Because dividends and share repurchases offer direct, tangible returns of capital to shareholders. They also demonstrate management’s confidence in the financial stability of the company and its capacity to generate ongoing cash flows. Additionally, there are other companies with similar characteristics. Here is a list of the top 10 companies ranked by total capital returned to shareholders via dividends and stock repurchases.

Top 10 Companies By Total Shareholder Return

Top 10 Companies By Total Shareholder Return

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For the complete ranking, go to Buybacks & Dividends Ranking

What do you observe here? The overall capital returned to shareholders as a percentage of the current market cap seems to be inversely related to growth prospects for reinvestments. Companies such as META and MSFT are experiencing much quicker growth in a more consistent manner than others; nevertheless, they have returned a significantly smaller portion of their market cap to shareholders.

That’s the downside of substantial capital returns. While they are appealing, it’s essential to consider: Am I sacrificing growth and solid fundamentals? With this in focus, let’s examine some figures for MSFT. (refer to Buy or Sell MSFT Stock for further insights)

MSFT Stock Fundamentals

• Revenue Growth: 14.9% LTM and 12.5% last 3-year average.
• Cash Generation: Nearly 25.4% free cash flow margin and 45.6% operating margin LTM.
• Recent Revenue Shocks: The minimum annual revenue growth over the last three years for MSFT was 6.9%.
• Valuation: MSFT is traded at a P/E multiple of 37.3
• Opportunity vs S&P: In comparison with the S&P, it offers higher valuation, superior revenue growth, and better margins

MSFT Stock Fundamentals

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MSFT Stock Historical Risk

Nevertheless, Microsoft is not shielded from substantial declines either. It dropped approximately 65% during the Dot-Com crash and nearly 58% throughout the Global Financial Crisis. Recent shocks have also resulted in significant downturns — about 37% in the inflation shock and nearly 28% during the Covid sell-off. Even the smaller correction in 2018 caused a drop of over 18%. Strong fundamentals are important, but when the market experiences a severe sell-off, even leading companies like MSFT can get swept up in the downturn.

Also, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.