How does an investor achieve a 7% yield on cost from Microsoft?

By buying the stock ten years ago at ~$50, the current annual dividend of $3.64 yields 7% on cost.

Which companies are suitable for this strategy?

Companies like Microsoft, Johnson & Johnson, McDonald's, Procter & Gamble, Coca-Cola, and Lowe's.

20-Year Dividend Strategy for Young Investors

The article outlines a 20-year dividend growth strategy for investors who don't need immediate income. By buying and holding stocks like Microsoft, Johnson & Johnson, and McDonald's, investors can achieve high yields on cost over time.

July 10, 2026

2 min read

Source: 24/7 Wall St.

Key Numbers

msft purchase price 10y ago

~$50

msft current quarterly dividend

$0.91

msft current annual dividend

$3.64

msft yield on cost

~7%

msft current yield

~1%

A 20-year dividend strategy is designed for investors who do not need immediate income but rather focus on dividend growth over time. The idea is to buy shares of strong companies such as Microsoft (MSFT), Johnson & Johnson (JNJ), McDonald's (MCD), Procter & Gamble (PG), Coca-Cola (KO), and Lowe's (LOW).

For example, an investor who bought Microsoft shares ten years ago at around $50 per share now receives annual dividends of $3.64 per share (based on the current quarterly dividend of $0.91). This translates to a yield on cost of roughly 7%, even though the stock's current yield is about 1%. The starting yield helped achieve this growth.

Details

The strategy involves selecting companies with a long history of annual dividend increases, such as those in the Dividend Aristocrats list. The goal is to build a growing income stream over time, rather than chasing a high immediate yield.

Context

This strategy is suitable for young investors with a long time horizon who do not need current cash income. They can reinvest dividends to buy more shares, compounding growth.

What It Means for Investors

The strategy offers a way to build long-term wealth with a growing income stream, but it requires patience and discipline to avoid selling during market volatility.

Frequently Asked Questions

It is a buy-and-hold strategy focusing on companies that consistently increase dividends, aiming for a high yield on cost after two decades.

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This article was rewritten in Wrqti's editorial style based on information from the original source above. Content is informational only — not investment advice.