Hey, Zach here!

Last week, we had fantastic earnings from top companies like Microsoft, Meta, HESM, Visa, Apple, etc. However, we ended the week with a large sell off. Will the summer rally continue?

Today’s topics:

1. Microsoft Stock Analysis

2. Top Dividend Increases This Week

3. New Earnings This Week

The Key Story

Why You Should Own Microsoft Stock & Hold Forever – MSFT Stock Analysis

💻 My Stock Research Tool: https://www.dividenddata.com/

1. Earnings at a Glance

• Q4 2025 Revenue: $76.4 billion (+3.6% vs. analysts)

• Non-GAAP EPS: $3.65 (+8.3% vs. analysts; all-time high)

• After-hours Move: +8.3% on the beat

2. Cloud & AI: The Growth Engine

• Q4 Microsoft Cloud Revenue: $46.7 billion (+27% YoY)

  • Includes Azure, Microsoft 365, Dynamics 365

• Azure Alone: $75 billion TTM (Q4 2025 +39% YoY)

  • Outpaces AWS and Google Cloud

  • Fueled by AI infrastructure demand (OpenAI partnership)

• Scale Milestone:

  • Azure now >26% of total revenue ($75 billion+ in FY 2025)

  • Model:

    • At 39% growth → Azure → $200 billion+ by 2028

    • Even 30% growth → Azure → $100 billion+ by 2026

3. Dividend Growth & Capital Returns

• 10-Year CAGR: 10.35% dividend increase, year-in, year-out

• Payout Ratios:

  • Free cash flow: 29%

  • Net income: 24%

• Buybacks & Reinvestment: Balanced between returning cash and funding acquisitive, high-ROI growth

4. Valuation Perspective

• Forward P/E: ~33× on next-year EPS estimates (~13% growth)

• Long-Term P/E Trajectory:

  • If MSFT sustains 13–17% EPS growth through 2029 → P/E falls to ~21× on ’29 earnings

• Key Insight: You’re paying for durable, compounding growth—cloud and AI adoption aren’t done ramping

5. Capital Expenditure & Future Growth

• Q4 2025 CapEx: $24.2 billion; Q1 2026 guidance: $30 billion

• Why It Matters:

  • Heavy investment in AI/data centers temporarily mutes free cash flow growth

  • Builds the foundation for future revenue and earnings growth

6. My Take & Positioning

I hold MSFT as my #1 position (24% of my portfolio) because:

• Best-in-class cloud/AI growth runway

• Reliable dividend growth backed by world-class free cash flow

• Attractive long-term valuation when you price in durable earnings acceleration

Disclosure: I am long MSFT. Use my favorite research tool to run these numbers yourself: https://www.dividenddata.com/

Dividend News

🚀 Top Dividend Raises This Week

One of my top high yield dividend growth stocks, HESM, just raised it’s quarterly dividend this week. That’s an increase every quarter!

• CTAS - Cintas raises quarterly dividend by 15.4% to $0.45/share

• HESM - Hess Midstream Partners raises quarterly dividend by 3.83% to $0.737/share

• MDLZ - Mondelēz raises dividend by 6.4% to $0.50

• STE - Steris raises quarterly dividend by 10.5% to $0.63/share

• CLX - Clorox raises quarterly dividend by 1.6% to $1.24/share

• MCK - McKesson raises quarterly dividend by 15.5% to $0.82/share

• KVUE - Kenvue raises dividend by 1.2% to $0.2075

• WELL - Welltower raises dividend by 10.4% to $0.74

Track your dividends and get breaking news on increases, decreases, and special dividends with DividendData.com.

Earnings News

Upcoming Earnings This Week

Multiple top stocks report this week:

• PFE - Pfizer

• CAT - Caterpillar

• AMD - Advanced Micro Devices, Inc.

• PLTR - Palantir Technologies

• HIMS - Hims & Hers Health

• SMCI - Super Micro Computer, Inc.

• UBER - Uber Technologies

• MCD - McDonalds

• DIS - The Walt Disney Company

• SHOP - Shopify

• OXY - Occidental Petroleum

• O - Realty Income

• LLY - Eli Lilly

• CELH - Celsius Holdings

📅 Keep Investing. Stay informed.

– Zach
Founder, Dividend Data

P.S. Questions or suggestions? Reply to this email—I'd love your feedback!

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Disclaimer: Dividend Dividend (Dividend Data LLC) is not a professional financial service. All materials released from Dividend Data (Dividend Data LLC) are for educational and entertainment purposes. Dividend Data (Dividend Data LLC) is not a replacement for a professional's opinion. Contributors to the Dividend Data (Dividend Data LLC) might have equities mentioned in the newsletter