Last Updated: April 29, 2021
If you’re thinking of investments that could deliver good returns while protecting your money from inflation, the stock market might be a good option. It may feel too risky for novice investors to bet on an unknown company, though.
So, why not consider buying the stock of a well-established enterprise like Microsoft Corporation (NASDAQ: MSFT)? The tech giant has a wide moat in an industry set to reach $5 trillion in 2021. It might be the right time for you to learn how to buy Microsoft stock.
The stock market is complex and could be tricky. So, you have to be wise about your decisions and gain certain knowledge before investing your hard-earned money. But even if you lack expertise, it’s okay. You have to start somewhere, right? In today’s modern era, you can easily tap into valuable information and buy big companies’ shares online without much hassle.
This article will help you figure out whether Microsoft stock is a buy or a sell.
About the Company
Microsoft was founded in 1975 by Bill Gates and Paul Allen. Currently headquartered in Redmond, Washington, the multinational tech company is listed on the NASDAQ under the MSFT ticker. The net worth of Microsoft reached $1 trillion in 2020. The company develops and manufactures many software products such as Windows and Office, but also supports and distributes the following:
- Smartphones and tablets
- Internet browsing and searching systems
- Cloud computing
- Data security
- Social networking
Should You Buy Microsoft Stock?
Microsoft’s current CEO is Satya Nadella. Since he took the helm in 2014, the tech giant has expanded its reach by acquiring professional networking site LinkedIn and code-sharing service GitHub. Also, Microsoft’s share price has nearly tripled since Nadella took over.
If you’re interested in joining the market frenzy, you should first consider the Microsoft stock history performance, trends, and forecast, as well as your investment portfolio. Also, make sure you weigh the risk, keeping in mind the stock market’s volatility.
Microsoft Stock Performance
Microsoft stock price was $21 at the initial public offering (IPO) back in 1986. Currently, the company’s shares are among the most expensive on the market. The last five years have been the best for Microsoft stocks, marking a whopping increase of almost 360%.
- Microsoft’s latest closing stock price as of February 24, 2021, was $234.55.
- The MSFT dividend yield currently stands at 0.96%.
- The all-time high MSFT stock closing price was $244.99 on February 12, 2021.
- Microsoft’s 52-week high is $246.13 — 4.9% above the current share price.
- The 52-week low is $132.52, which is 43.5% below the current stock price.
- The average Microsoft stock price for the last 52 weeks is $201.90.
How Has Microsoft Dealt With Covid-19?
Microsoft has recently posted better-than-expected fiscal 2021 second-quarter results. The total revenue for the three months ended December 2020 was $43.1 billion — 17% up compared to the prior-year period. Net income rose 33% to $15.5 billion. The main growth driver was the commercial cloud business, which contributed more than $16.7 billion to the company’s revenue.
Microsoft returned $10 billion to shareholders in the form of share repurchases and dividend payouts. This marked an 18% increase compared to the second quarter of fiscal 2020.
The positive results show Microsoft has dealt well with the Covid-19 pandemic, benefitting from the work-from-home and learn-at-home trends. The necessary remote transitions have spurred an increased demand for PCs, cloud software, and related services.
Microsoft shares have also climbed since the broader market fall at the beginning of the pandemic. The stock price has jumped 40% since March 2020, hitting all-time highs several times in the past 12 months.
MSFT Stock Technical Analysis
According to IBD Market Smith, MSFT stock broke out of a double bottom base at a buy point of $175.10. Microsoft’s stock is on IBD’s Leadership list and in the IBD Long Term Leaders Portfolio. The company has outperformed 58% of stocks over the past 12 months, and ranks third out of six stocks in IBD’s Computer Software Desktop industry group.
Pros of Adding Microsoft Stocks to Your Portfolio
Let’s look at some of Microsoft’s strengths that may make the company a viable investment option.
- Multiple Revenue Streams
Microsoft is not just about PCs anymore. Their cloud computing business is a big seller right now, and the company has recently acquired the networking site for programmers – GitHub. Apart from that, the tech giant still sells Office, Windows, and Xboxes.
- Powerful Leadership
The current Microsoft CEO, Satya Nadella, has reshaped the company according to the modern era. He helped the tech giant move further into the realms of AI and cloud computing, and at the same time, started working to establish a corporate culture. It’s certain that he has different goals compared to Bill Gates and is even willing to cooperate with competitors, but apparently, that’s a winning strategy.
- Constant Growth
Microsoft is known for its ability to adapt to changing climates. The company has experienced unprecedented growth and outperformed its competitors through its skyrocketing cloud computing business.
How to Buy Microsoft Stock
Here’s some practical advice on how to buy Microsoft stock:
Find an Online Broker
One of the essential characteristics of online brokers is that they have access to exchanges. Not every broker will allow you to buy Microsoft shares since they may not have access to the NASDAQ, where the company is listed. Thus, you need a service that provides access to this exchange. Check out our list of broker options further below.
Open Your Brokerage Account
Once you have found your online broker, you need to open up an account. This process is similar to opening a regular bank account. Some brokers run background checks, which might take a couple of days, while others let you set up an account in a matter of a few clicks.
Deposit Money into Your Account
The next step is to make a deposit. When you purchase a stock, you will pay in cash. But the money must be sent to your broker first. This process is straightforward and quick. The most common ways to deposit cash is via bank transfer and using a credit/debit card.
Buy Microsoft Shares
After completing the steps above, you have to log into your account and search for MSFT stock. You have to enter the number of shares you wish to buy and then press the buy button. This will execute your order and initiate the purchase.
Review Your Investment
The work is not quite done yet. Once you have purchased the stocks, it’s time to review them regularly. This mostly depends on your own strategy. For instance, if you bought the shares as a long-term investment, you could participate in annual shareholder meetings and get the latest company news and info.
5 Best Brokers for Buying Microsoft Stocks
DEGIRO is a Dutch discount broker established in 2008. The Dutch FMA regulates it.
Interactive Brokers is a US discount broker. It’s listed on the stock exchange and is regulated by several authorities, including the SEC.
Fidelity is also a US stockbroker regulated by the SEC and FINRA.
This is a US-based discount broker that also allows international clients to open up an account. The SEC and FINRA regulate it.
- Trade Station Global
This is an introducing broker of Interactive Brokers, regulated by the UK FCA.
Now you know how to buy Microsoft stock, but whether this is the right investment option for you is all down to your assessment.
In a nutshell, the company is very strong financially, and it seems like its cloud computing business will grow over the years. While this is a positive factor to consider, Microsoft’s valuation seems to reflect it already. You can’t expect drastic share price spikes. So, the tech powerhouse may not be the best choice for investors seeking short-term returns.
The Microsoft stock symbol is NASDAQ:MSFT.
Microsoft’s fiscal year ends June 30.
Yes. In December 2020, Microsoft’s board of directors declared a quarterly dividend of $0.56 per share.
Yes. Microsoft makes money from the sale of software and hardware for consumer enterprises. And tech stocks refer to any company involved in the technology sector.
As per the Trefis Price estimate, Microsoft’s stock has a fair value of $158, which is in line with the current market price. Our guide on how to buy Microsoft stock looks into the shares’ recent performance, which also shows no sign of overvaluation.