Why Microsoft Is a Great Income Stock Despite a 0.77% Yield

When mapping out compound growth scenarios, one trick to use is the "Rule of 72." To see how long it takes an amount to double at a fixed growth rate, divide 72 by the rate of increase for your answer. For instance, capital growing at 8% a year will double in nine years, while an investment compounding at 10% a year will double in roughly seven.The Rule of 72 is imprecise, but it gets you close. Even if the doubling takes a few years, you would be surprised at how that can add up over an investing lifetime. For instance, the S&P 500's average annual gain since 1975 is 12.2% each year, including dividends. Using the Rule of 72, that's a double roughly every six years, which doesn't sound life-changing. Yet it's enough to turn every $100 invested 50 years ago into $33,854.The Rule of 72 jumped out at me when researching historical dividend growth for Microsoft (NASDAQ: MSFT). Since it began raising its dividend in 2010, Microsoft's payouts have grown by an average annual rate of 13.9%. While only a 15-year streak, that's faster than the S&P 500's average annual growth over the last half century, and it's powerful enough for Microsoft's dividend to have increased by 600% since 2010.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool