This will be the first dividend champion from the “Magnificent Seven”.

In contrast, Apple resumed paying dividends in 2012 after a 17-year hiatus that began in 1995. In the 14 years since, its payout has grown from $0.10 per share to $0.26 per share today, a 176% increase.

Microsoft’s two-year head start isn’t the only reason to bet on the Seattle-based software giant. Its payout ratio of just 23.6% means it only spends a percentage of its net income to cover its current dividend, making it highly sustainable, especially in light of its 12.5% ​​year-over-year earnings growth last quarter.

This payout ratio is actually higher than Apple’s which argues for Team Cupertino. But in this case, Microsoft’s slightly higher payout ratio is a reflection of management’s preference for rewarding shareholders through earnings rather than share buybacks. After all, Microsoft spent $18.4 billion on share buybacks in the 2025 fiscal year, compared to Apple’s $96.7 billion (and it spent $100.4 billion in the fiscal year before that).

While the Magnificent Seven stocks look invincible right now, 10 years is an era for the market. Adding to the uncertainty is that management has yet to issue dividend guidance.

But there’s another big reason to think Microsoft’s dividend will continue to grow. Its $60 billion share buyback program, which is already partially completed, may still have enough dry powder to retire 100 million shares. That would make Microsoft’s dividend more secure, as the company would save $91 million per quarter in dividends for those retired shares, freeing up cash for future growth.

Today, Microsoft pays a dividend yield of 0.76%, which doesn’t seem great. Despite a 600% increase in dividends since 2010, the yield is low because, as fast as it is growing, Microsoft shares have exploded more than 2,756% over that time frame. With the pace and seriousness with which management increases payouts, this yield could become a force to reckon with over the next decade.

Microsoft is a buy for income investors looking for exposure to the AI ​​revolution and the tech sector more broadly.

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William Dahl has a position at Apple. The Motley Fool has positions on and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. Motley Fool has a disclosure policy.

Prediction: This will be the first dividend champion from “The Magnificent Seven” was originally published by Motley Fool.