Microsoft vs Apple Which Is a Smarter Choice?

Microsoft and Apple are two of the most iconic and profitable tech companies in the world, and their stocks are highly sought after by investors. Microsoft has established itself as a leader in software, cloud computing, and gaming, while Apple is renowned for its cutting-edge hardware products and services. Both companies have a loyal customer base and strong financial performance, making their stocks a popular choice for those looking to invest in the ever-evolving tech industry. In this article, we will compare the stock performance of Microsoft and Apple, analyzing the key factors that have influenced their growth and success.

Microsoft or Apple?

When comparing Microsoft and Apple, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Microsoft and Apple.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Microsoft has a dividend yield of 0.71%, while Apple has a dividend yield of 0.44%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Microsoft reports a 5-year dividend growth of 10.16% year and a payout ratio of 24.63%. On the other hand, Apple reports a 5-year dividend growth of -19.56% year and a payout ratio of 16.25%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Microsoft P/E ratio at 34.92 and Apple's P/E ratio at 36.44. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Microsoft P/B ratio is 10.98 while Apple's P/B ratio is 59.97.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Microsoft has seen a 5-year revenue growth of 0.99%, while Apple's is 0.82%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Microsoft's ROE at 34.56% and Apple's ROE at 137.87%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $418.21 for Microsoft and $222.76 for Apple. Over the past year, Microsoft's prices ranged from $362.90 to $468.35, with a yearly change of 29.06%. Apple's prices fluctuated between $164.08 and $237.49, with a yearly change of 44.74%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.