With a model like Dividend Growth, one of the goals is to find equities paying high dividends—but another is to look for positions that have the opportunity to grow and create greater returns for investors. To that end, model manager James Hofmann has added additional shares of Microsoft (NASDAQ: MSFT) to his model. On January 11th, MSFT’s dividend yield was 2.27 percent (source: money.cnn.com), which is a little lower than the dividend yields Hofmann usually targets. But MSFT is a multi-faceted company with its proverbial hands in a lot of different pies, which could make a big difference in its ability to grow over the years.
First, we have MSFT’s thriving Xbox 360 gaming unit, which puts the company in direct competition with Nintendo (OTC: NTDOY) and Sony (NYSE: SNE). Sales of the gaming system saw a 91 percent increase year-over-year in December 2010 thanks to the new Kinect hardware.
Next, you have MSFT’s operating system and software, much of which competes with Apple’s (NASDAQ:AAPL). Recently, MSFT announced its new suite of business applications, Dynamics AX 6, which will feature enterprise resource planning (ERP) solutions.
Further, you have MSFT’s foray into the world of cell phones with the Windows Phone 7 OS, making the company competitors with Google (NASDAQ: GOOG) and AAPL (again). And speaking of Windows 7, let’s not ignore MSFT’s presence in the tablet arena.
Let’s take a look at MSFT’s performance compared to its competitors over the past six months.
*Charts and prices courtesy of Yahoo Finance.