Key Takeaways
- Microsoft just raised its quarterly dividend 8% to $0.98, and Johnson & Johnson raised its payout for the 64th straight year in April.
- Johnson & Johnson yields about 2%, more than double Microsoft’s 0.8%, but Microsoft has grown its dividend about twice as fast over the last five years.
- Microsoft’s cash dividend payout ratio is a well-covered 40% TTM but spikes to a risky 89% going forward as capital spending eats into free cash flow, against a steady 57% and 53% for Johnson & Johnson.
Microsoft (MSFT) just gave its shareholders a raise. On Sept. 15, its board raised the quarterly dividend 7 cents, or 8%, to $0.98 a share.
Whereas back in April, Johnson & Johnson (JNJ) put out the kind of headline most companies can only dream of: “Johnson & Johnson Announces 64th Consecutive Year of Dividend Increase.”
Both are dividend growers, with very different starting points. Microsoft grows fast from a small yield, and J&J grows slowly from a much bigger one. So if you’re buying for income, which one will actually pay you more in 10 years?
| Metric | Microsoft (MSFT) | Johnson & Johnson (JNJ) |
|---|---|---|
| Forward yield | 0.77% | 1.97% |
| Dividend growth, 5-yr annual | 10.2% | 5.2% |
| Streak of raises | 17 years | 64 years |
| Cash dividend payout ratio, TTM | 39.5% | 56.7% |
| Cash dividend payout ratio, forward | 89.2% | 53.0% |
| Net debt ÷ EBITDA, TTM | 0.26x | 0.81x |
Source: TIKR and company filings, prices at the Sept. 28, 2026 close; forward is consensus for each company’s next fiscal year.
Microsoft: Small check, big raises
Microsoft’s business is humming. Revenue rose 18% to $90.0 billion in its latest quarter, and CEO Satya Nadella pointed out that “Azure revenue surpassed $100 billion for the first time” this fiscal year.
The dividend has grown about 10% a year over the last five years, and free cash flow has covered it easily…
And even after two straight years of falling free cash flow, $67 billion covers $26.5 billion of dividends with plenty to spare.
The catch is AI spending. Capital spending jumped about 80% to $116 billion in fiscal 2026, and analysts expect free cash flow to roughly halve next fiscal year, to $32.34 billion. That takes Microsoft’s cash dividend payout ratio from 39.5% TTM to 89.2% forward. (Consensus does see free cash flow recovering to $45.81 billion the year after.)
For income, $10,000 in Microsoft today pays about $77 a year. If the dividend keeps growing at its 10-year pace of 9.7%, that’s about $195 in year 10. So, call it a 2% yield on your cash today. Not amazing on its own, but of course you want to consider capital appreciation as well.
Johnson & Johnson: Big check, steady raises
J&J is growing too. Second-quarter sales rose 6.6% to $25.3 billion, and management raised its 2026 sales guidance to $101.1 billion at the midpoint. As CEO Joaquin Duato put it, J&J is “on track to meet our 2026 target of more than $100 billion in annual revenue for the first time in our Company’s 140-year history.”
The dividend grows more slowly: about 5% a year over the last five years, and this April’s raise was 3.1%. But the starting check is much bigger. $10,000 in J&J today pays about $197 a year. At its 10-year growth rate of 5.7%, that’s about $343 in year 10.
Here’s how the cash has kept up…
Dividends paid rose about 52% over that stretch while free cash flow rose about 22%, a gap I’d keep an eye on.
Still, J&J’s cash dividend payout ratio is 56.7% TTM and 53.0% forward, and net debt is just 0.81x EBITDA. The main risk is that dividend growth keeps slowing. Even at 3.1% a year, though, that $10,000 would pay about $267 in year 10.
So which dividend wins?
Ultimately, I have to go with Johnson & Johnson on this one. It pays more than 2.5 times as much income today, and even with Microsoft’s faster growth, J&J is still ahead in year 10: $343 vs. $195 on that $10,000. Over the full decade, that’s about $2,709 in dividends vs. $1,328.
For Microsoft to match J&J’s year-10 income, its dividend would need to grow about 16% a year. At today’s rates, it doesn’t catch up for about 25 years.
That’s a long time to wait.
Coverage doesn’t change the answer. On trailing numbers, Microsoft’s dividend has more room (a 39.5% cash dividend payout ratio vs. 56.7%). On forward estimates, J&J’s does (53.0% vs. 89.2%). Either way, J&J sends the bigger check every year for the next decade.
This isn’t to say Microsoft is the worse stock. It may well be the better total-return pick. Consensus has revenue growing 17.8% and 19.5% over the next two fiscal years, it spent $22.27 billion on buybacks over the last twelve months, and it has raised its dividend 17 years in a row.
If analysts are right, Microsoft adds about $235 billion of yearly revenue by fiscal 2029, nearly twice what J&J is expected to bring in for all of 2029. That’s a whole lot of growth.
It’s just that the question here is dividend income, and on that one, J&J’s head start is too big to overcome.
So what is Johnson & Johnson stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Johnson & Johnson could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
