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2015-04-22

  • dirt2624 commented on Dividend Mantra's article 04-22 18:30
    Why I Am Buying Microsoft
    I was fortunately able to put some more capital to work one last time this month. This will for sure be my last stock purchase for April, but I had a...
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    dirt2624 04-22 19:30
    • You have to understand that there is a perception of precision in my back of the envelope calculations but that is an illusion. My calculations just tell me that MSFT is a good enough investment for further research. I also looked at the yield for the last 10 years and it seems to be within about 10% of the average high yield when yield spiked. From a dividend perspective this also tells me that MSFT is a good enough investment for further research.

      I would like to see a big market correction so that I could buy when it is an even better value - LOL - I'm Scottish!
  • dirt2624 commented on Dividend Mantra's article 04-22 11:32
    Why I Am Buying Microsoft
    I was fortunately able to put some more capital to work one last time this month. This will for sure be my last stock purchase for April, but I had a...
    View all 2 comments
    dirt2624 04-22 12:32
    • By my calculations using the lower of the 10yr and 5 yr book value growth rate and compounding for 5 years I get future book value at $16.97. Then using the average price to book value of 5.8 gives me a price in 5 years of $98.43 which works out to an average return of 26% per year. Discounting 98.43 for 5 years at 12% gives a price of $55.93 which would be considered the intrinsic value today using my back of the envelope calculations and that implies a 35% margin of safety in one of the worlds best and safest cash generaters.

      You could use the future book value and apply the average ROE to estimate future earnings and then apply a payour ratio to estimate the dividends. All in all, looks like a good buy to me - I might just purchase it myself after further research. I have been watching MSFT for a while now.
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