Microsoft’s Stock in Oversold Territory: A Dividend Investor’s Perspective

The DividendRank formula from Dividend Channel ranks thousands of dividend stocks, focusing on those with strong fundamentals and appealing valuations. Currently, Microsoft Corporation (Symbol: MSFT) holds a rank above average, placing it in the top 50% of this coverage universe. This position indicates that it may be one of the most compelling investment opportunities worth deeper analysis.

A recent development further heightens interest in Microsoft Corporation. On Monday, MSFT shares were traded as low as $378.91, entering what is known as oversold territory. Oversold status is determined using the Relative Strength Index (RSI), a technical analysis tool that gauges momentum on a scale from zero to 100. A stock is classified as oversold when its RSI falls below 30.

As of now, Microsoft’s RSI reading stands at 29.3. In contrast, the average RSI for all dividend stocks in Dividend Channel’s coverage is 46.0. A declining stock price generally improves the opportunity for dividend investors to secure a higher yield. Notably, MSFT’s last annualized dividend was $3.32 per share, yielding an annual return of 0.84% based on the recent share price of $393.31.

Investors with a bullish outlook might interpret MSFT’s RSI of 29.3 as a sign that intense selling may be subsiding. This could present potential buying opportunities. To determine whether a bullish stance on MSFT is warranted, investors should also consider its dividend history as a key fundamental factor.

While dividends can be unpredictable, examining the historical chart below offers insights into the likelihood of continued payouts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.