Microsoft’s dividend growth rate is more important than current yield for long-term investors. The tech giant is strategically investing in AI without straining its balance sheet. Microsoft leads in total dividend payouts among S&P 500 companies, boasting 16 consecutive annual raises. Despite a low yield, Microsoft is a top dividend-paying growth stock.

Investors often focus too much on forward dividend yield, overlooking the importance of dividend growth rate. Microsoft’s stock buybacks and dividend increases have outpaced its yield decrease. The company’s diverse business model and high-margin operations support its commitment to dividends and buybacks, making it a strong long-term investment.

Microsoft’s investment in AI is bold but controlled, with a focus on maintaining positive free cash flow. The company’s balanced approach to organic growth, dividends, and buybacks sets it apart from other tech giants. Microsoft’s high-margin business segments and disciplined spending make it a foundational stock to buy now.

Before investing in Microsoft, consider the top 10 stocks recommended by the Motley Fool Stock Advisor team. While Microsoft may not be on the list, the recommended stocks have the potential for significant returns. Stock Advisor has a track record of outperforming the S&P 500, offering valuable insights for individual investors.

Read more at Nasdaq: Meet the “Magnificent Seven” Stock That Pays More Dividends Than Any Other S&P 500 Company. Here’s Why It’s a Buy Before 2026.