This Dow Jones Dividend Growth Stock Just Hit an All-Time High. Here's Why It's Still Worth Buying in February.

Microsoft (MSFT) has been on a tear, fueled by growing optimism about interest rate cuts and economic recovery. The stock recently hit an all-time high, reaching 39,282.28 points in intraday trading on Feb. 23, 2024. The Dow Jones Industrial Average (DJIA) component has surged 56.8% in 2023 and another 18.9% in 2024, driven by several specific factors. Here's why this dividend growth stock is still worth buying in February.



1. AI Developments: Microsoft's role in OpenAI and advancements in AI for Microsoft Cloud and GitHub have been significant drivers of the stock's performance. In 2023, the stock surged 56.8% in response to these developments, and it continued to rise by 18.9% in 2024.
2. Expansion of Microsoft Copilot: The general availability of Microsoft Copilot to Microsoft 365 enterprise customers on Nov. 1, 2023, also contributed to the stock's performance. Microsoft Copilot is an AI-powered productivity tool that enhances user experience and efficiency.
3. Strong Financial Performance: Despite increased spending on AI and lower near-term profit margins, Microsoft's quarterly results have been generally positive. The company's balance sheet remains strong, with more cash, cash equivalents, and marketable securities than debt. This financial strength supports the company's growth prospects and dividend payouts.
4. Dividend History and Growth: Microsoft has a proven track record of increasing its dividend for 15 consecutive years at a 13.2% compound annual growth rate. This consistent dividend growth, along with a low yield due to the stock's outperformance, has attracted income-focused investors. The company's forward price-to-earnings ratio (P/E) of 34.4 is reasonable given its record-high sales and highest operating margin in over a decade.



Microsoft's recent all-time high is sustainable in the long term, supported by several factors:

* The company's continued investment in and monetization of AI technologies, which are expected to drive growth and innovation.
* Microsoft's strong balance sheet, allowing for continued investment in growth areas and dividend payouts.
* The company's record-high sales and highest operating margins in over a decade, indicating a robust business performance.
* Microsoft's history of dividend growth, supported by the company's financial performance and commitment to returning value to shareholders.

In conclusion, Microsoft's recent all-time high is driven by several specific factors, including AI developments, the expansion of Microsoft Copilot, strong financial performance, and a history of dividend growth. These factors suggest that the company's recent all-time high is sustainable in the long term, making it an attractive investment opportunity in February.