6 Tech ETFs With Maximum Exposure To Microsoft

The world's largest software maker Microsoft (MSFT - Free Report) hit a new record high on Sep 19, following dividend hike and new share repurchase plan news.

The company announced that it will repurchase as much as $40 billion of shares in a new buyback program, which has no expiration date and may be terminated at any time. This is the third time that Microsoft has pursued a buyback plan of $40 billion after 2013 and 2016. Additionally, Microsoft boosted its quarterly dividend by 11% or 5 cents to 51 cents per share. The new payout represents an annual yield of 1.45%, higher than Apple’s dividend yield of 1.39%.

Microsoft now has a market cap of $1.1 trillion, jumping almost 40% this year. It is the second-best performing stock in the Dow, trailing Apple (AAPL - Free Report), which has gained 41% so far this year and the only other company with a market valuation above $1 trillion. The company has strongly achieved its success in shifting its business toward Internet-based computing, which includes products such as Office 365, Dynamic 365 and the flagship Azure computing platform. This has become a major source of growth.

Solid Fundamentals

Microsoft saw solid earnings estimate revision of 13 cents for the fiscal year (ending Jun 2020) over the past three months. This represents substantial year-over-year growth of 10.11%, much higher than the industry average growth of 7.78%. Revenues are expected to grow 11.16% for this fiscal year, much higher than 5.41% industry average growth. As such, the software leader has a top Growth Score of A.

Additionally, the stock is cheaper than the most others in the industry with a P/E ratio of 26.48 versus 29.50 for the industry.

Microsoft carries a Zacks Rank #3 (Hold) and has a VGM Score of B. It falls under a top-ranked Zacks industry (top 28%), which suggests that its outperformance is likely to continue in the days ahead.

ETFs in Focus

Investors seeking to bet on this software leader could definitely try out ETFs. While there are several ETF options available, we have highlighted six with double-digit exposure to Microsoft that could be compelling choices.

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