MSFT vs TXN: Dividend Yield, Growth & Safety Comparison
Microsoft Corp (MSFT) and Texas Instruments Inc (TXN) are both in the Information Technology sector, making them natural rivals for dividend investors. TXN offers a significantly higher 2.49% yield compared to MSFT's 0.84%, a gap of 1.65%. For dividend growth, TXN leads with a 5-year CAGR of 14.6% versus MSFT's 10.3%. Both stocks carry a "Safe" dividend safety rating. MSFT is a Dividend Contender with 20 years of consecutive increases.
Key Metrics Comparison
| Metric | MSFT | TXN |
|---|
| Dividend Yield | 0.84% | 2.49% |
| Annual Dividend | $3.48 | $5.50 |
| 5-Year CAGR | 10.3% | 14.6% |
| Payout Ratio | 21% | 1% |
| Consecutive Years | 20 | 0 |
| Price | $401.99 | $226.09 |
Yield Comparison
Texas Instruments Inc (TXN) currently yields 2.49%, which is solid for the broader market. That's 1.65% more than Microsoft Corp (MSFT), which yields 0.84%. In dollar terms, TXN pays $5.50/share annually versus MSFT's $3.48/share.
Dividend Growth
Over the past five years, TXN has grown its dividend at a 14.6% CAGR compared to MSFT's 10.3%. MSFT: Dividend growth has been steady, with a 3-year CAGR of 10.4% and a 5-year CAGR of 10.3% (10-year: 9.8%). TXN: Dividend growth is accelerating — the 3-year CAGR of 20.6% exceeds the 5-year rate of 14.6% and the 10-year rate of 17.8%.
Dividend Safety
MSFT's dividend safety is rated "Safe." The payout ratio of 21% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 4.6x. TXN's dividend safety is rated "Safe." The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.0x. TXN's payout ratio of 1% is more conservative than MSFT's 21%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in TXN generates approximately $249/year in dividend income, compared to $84/year from MSFT — a difference of $165/year. At $100,000, that gap widens to $1650/year.
Verdict
- Best for income: TXN
- Best for growth: TXN
- Best for safety: TXN
Frequently Asked Questions
Which has a higher dividend yield, MSFT or TXN?
Texas Instruments Inc (TXN) has a higher dividend yield of 2.49% compared to Microsoft Corp (MSFT) at 0.84%.
Is MSFT or TXN a better dividend growth stock?
Texas Instruments Inc has the stronger dividend growth with a 5-year CAGR of 14.6%, compared to Microsoft Corp's 10.3%.
Which is safer for dividend income, MSFT or TXN?
Microsoft Corp's dividend safety is rated "Safe" while Texas Instruments Inc is rated "Safe." The payout ratio of 21% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 4.6x. The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.0x.
How much income does $10,000 in MSFT vs TXN generate?
A $10,000 investment in MSFT generates approximately $84/year in dividends, while the same amount in TXN generates about $249/year.
Is MSFT or TXN a Dividend Aristocrat?
Microsoft Corp is a Dividend Contender with 20 consecutive years of increases. Texas Instruments Inc does not currently qualify for aristocrat status.
Which has a lower payout ratio, MSFT or TXN?
Texas Instruments Inc has a lower payout ratio of 1% compared to Microsoft Corp's 21%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
MSFT vs TXN: which is better for retirement income?
It depends on your priorities. TXN for current income, TXN for dividend growth, TXN for safety. Many retirement investors hold both for diversification.
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