Battle of Dividend Stocks: Apple, Inc. Versus Microsoft Corporation

Which is the better dividend stock -- Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT)? Both companies boast significant cash flow and enduring business models with key competitive advantages, making them worth a closer look for investors looking for income. But is one stock superior to the other as a dividend stock? As is clear from Microsoft's high payout ratio of 83%, as well as the company's impressive three-year dividend compound average growth rate (CAGR) of 16%, the software giant clearly prioritizes dividends. Future dividend potential doesn't look as promising.

What's best about Apple as a dividend stock is the very aspect of what serves as a key concern for Microsoft as a dividend stock: dividend growth potential. With a payout ratio of just 22%, and with earnings on the rise recently, the tech giant's dividend looks like it has plenty of room for further increases. Comparing the two stocks head to head, Apple appears to be the better dividend stock for long-term investors, in my opinion. Significant upside potential for its dividend seems to outweigh risks with uncertainty toward business growth. It also outshines Microsoft's higher yield and dividend prioritization.

Source: Motley Fool

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