One of the more frustrating stocks on the market also might be one of the more valuable--which is why it's so frustrating. Countless number of amateur traders recognize the potential in Microsoft, which can be had at just $23.98, meaning countless number of amateur traders are just about fed up with the ups and downs that never really amount to anything over the past couple years.
However, while the Stock has maintained a relatively stable price, shareholders have been able to collect a roughly three percent annual dividend. And therein lies the value of MSFT.
You'll hear all kinds of things about how the Windows Phone 7 will compete with the likes of the iPhone, Droid and Blackberry (better late than never, Microsoft) or how once the company fires CEO Steve Ballmer (possible, but not as likely as some will have you believe) the stock will soar to the $30-40 range overnight. And you know what? Those statements might be accurate. Probably not, but there is potential.
But, regardless of those and several other optimistic outcomes, patient investors can sit back and collect a nice dividend without worrying about the price dipping too much more. The important thing for MSFT owners is patience. The stock may continue to drop, but a year from now, it will be at least back at $24 by all estimations, at which point you'll have made back whatever charge incurred by your broker for purchasing the stock. After about a year is when we really expect to see MSFT at minimum reaching $28-30, not astronomical but a nice little return. And in the meantime, shareholders can collect those dividends--one of the best way to make money in a down economy.
Microsoft is lagging behind in the smartphone market, which as we mentioned is a problem they are finally alleviating. They recently overpaid in their purchase of Skype. There is some concern (as a USA Today article pointed out yesterday) that the market for gaming consoles such as the Xbox is shrinking. But put all that aside and take a look at an undervalued (or worst case, appropriately valued) stock that will allow you to collect a dividend while holding a great opportunity for some nice gains in a year or two. Microsoft is making money and will continue to make money, no matter how much of that well has been dipped into by Skype and Bing and other foolish projects. As such, so long as you hold this for more than a month or two, it should be relatively easy to make a profit off of MSFT.
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