Microsoft Corporation (MSFT) Two-Stage Dividend Discount Model - Discounting Cash Flows
MSFT
Microsoft Corporation
MSFT (NASDAQ)

Estimated Value

USD

Market Price USD

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Two-Stage Dividend Discount Model

Used to estimate the value of companies based on two stages of growth. An initial period of high growth, calculated using [Sum of Discounted Dividends], followed by a period of stable growth, calculated using [Discounted Terminal Value].

Read more: GitHub Documentation

Interactive Assumptions

Discount Rate

Discount Rate

Discount Rate = Cost of Equity = Risk Free Rate + Beta * Market Premium

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

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↳ Beta

Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.

↳ Risk Free Rate

Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.

↳ Market Premium

Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.

High Growth Years

High Growth Years

The estimated number of years during which the company is expected to experience high growth. After this period, the company will transition to a stable growth phase.

Historical Years

Historical Years

The number of historical years used to calculate averages for historical data.

High Growth Rate

High Growth Rate

The estimated growth rate of Earnings Per Share (EPS) during the high-growth phase.

High Growth Payout

High Growth Payout

The estimated dividend payout rate expressed as a percentage of Earnings Per Share (EPS) during the high-growth phase.

Stable Growth In Perpetuity

Stable Growth in Perpetuity

The estimated stable rate at which the company's Earnings Per Share (EPS) will grow in perpetuity after the last projected period.

Stable Payout

Stable Payout

The estimated dividend payout rate expressed as a percentage of Earnings Per Share (EPS) after the last projected period.

Results

Sum of discounted dividends 26.95 USD
Discounted terminal value 251.2 USD
Terminal value 382.8 USD
Dividend in stable phase 17.01 USD
EPS in stable phase 19.26 USD
Average historical Dividend Growth Rate 10.13%
Average historical Payout Ratio 45.6%
Average historical Return on Equity 37.22%

Historical and Projected Dividends

Monetary values are in USD

Edit Chart Values 2025 2026 2027 2028 2029

amounts of USD except for #

2024 LTM 2025 2026 2027 2028 2029
Earnings Per Share 11.86 12.99 12.55 13.82 15.22 16.76 18.46
Dividend per Share 3.08 3.32 5.72 6.3 6.94 7.64 8.42
Dividend Growth Rate 10.39% 7.79% 85.78% 10.13% 10.13% 10.13% 10.13%
Discounted Dividend 3.08 3.32 5.26 5.32 5.39 5.46 5.52

amounts of USD except for #

Average LTM 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Net Income 49,950 96,635 88,136 72,361 72,738 61,271 44,281 39,240 16,571 25,489 20,539 12,193
Equity 149,842 321,891 268,477 206,223 166,542 141,988 118,304 102,330 82,718 87,711 71,997 80,083
Return on Equity 37.22% 35.99% 42.74% 43.45% 51.23% 51.79% 43.27% 47.44% 18.89% 35.4% 25.65% 13.58%
Common Dividends 16,628 24,681 22,887 20,774 19,040 17,358 15,905 14,502 13,244 12,316 11,650 10,548
Payout Ratio 45.6% 25.56% 25.97% 28.7% 26.19% 28.33% 35.91% 36.99% 80% 58.03% 69.34% 86.58%
Shares Outstanding 7,653 7,434 7,431 7,446 7,496 7,547 7,610 7,673 7,700 7,746 7,925 8,177
Reference Market Price 232.5 498.8 421.5 376.0 239.8 336.3 222.4 157.7 101.6 85.54 62.14 55.48
EPS 6.53 12.99 11.86 9.72 9.7 8.12 5.82 5.11 2.15 2.74 2.12 1.49
Dividend per Share 2.19 3.32 3.08 2.79 2.54 2.3 2.09 1.89 1.72 1.59 1.47 1.29
Dividend Growth Rate 10.13% 7.79% 10.39% 9.84% 10.43% 10.05% 10.58% 9.88% 8.18% 8.16% 13.95% 12.17%
Dividend Yield 1.3% 0.666% 0.731% 0.742% 1.06% 0.684% 0.94% 1.2% 1.69% 1.86% 2.37% 2.33%
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Discounting Cash Flows

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