MSFT vs TXN: Dividend Comparison
Dividend data as of
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.
Verdict
Yield Analysis
TXN yields 1.65% more than MSFT. In dollar terms, MSFT pays $3.48/share vs TXN's $5.50/share annually.
Dividend Growth
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: The payout ratio of 21% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 4.6x.
TXN: The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.0x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in MSFT vs TXN today?
At $401.99 per share, $10,000 buys about 24.9 shares of Microsoft Corp (MSFT). Each share pays $3.48 per year in dividends, so the position starts out generating roughly $87 per year — about $7 a month.
At $226.09 per share, $10,000 buys about 44.2 shares of Texas Instruments Inc (TXN). Each share pays $5.50 per year in dividends, so the position starts out generating roughly $243 per year — about $20 a month.
TXN is the larger income stream from day one: $157 per year more on the same $10,000 invested.
What could $10,000 of MSFT or TXN income look like in 10 years?
Microsoft Corp (MSFT) has raised its dividend about 10.3% a year over the past five years. If that pace held, the $84 per year that $10,000 generates today at the current 0.84% yield would reach $224 per year by 2036 — a 2.2% yield on the original cost.
Texas Instruments Inc (TXN) has raised its dividend about 14.6% a year over the past five years. If that pace held, the $249 per year that $10,000 generates today at the current 2.49% yield would reach $972 per year by 2036 — a 9.7% yield on the original cost.
On those trailing rates, TXN pays more in 2036: $972 versus $224 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would MSFT's dividend growth overtake TXN's higher yield?
It doesn't, on the trailing numbers. Texas Instruments Inc (TXN) yields more today (2.49% vs 0.84%) and has also grown its dividend at least as fast (14.6% vs 10.3% a year over five years). Unless MSFT accelerates its raises or TXN stumbles, MSFT never closes the income gap — TXN wins on both current income and growth.
Can MSFT and TXN afford their dividends?
Microsoft Corp (MSFT) earns $15.96 per share against $3.48 paid out in dividends — 4.6x coverage (a 21% payout ratio).
Texas Instruments Inc (TXN) earns $5.45 per share against $5.50 paid out in dividends — 1.0x coverage (a 1% payout ratio).
MSFT's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for TXN if earnings weaken.
Which fits an early-retirement income portfolio better, MSFT or TXN?
For income you need right now, Texas Instruments Inc (TXN) leads: $100,000 invested today pays about $207 a month at the current 2.49% yield, versus $70 a month from Microsoft Corp (MSFT) at 0.84%.
TXN also leads on dividend growth (14.6% vs 10.3% a year over five years), so the trailing numbers favor it on both fronts.
On consistency: MSFT has raised its dividend 20 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $243/yr in MSFT vs $1,243/yr in TXN by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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