Microsoft (NASDAQ: MSFT) has everything an investor would want in a dividend stock. The company pays a healthy $0.51 per share dividend while it earned $1.71 per share in its most recent quarter.

That’s a healthy ratio of paying out to shareholders while also keeping money on hand for investment. What’s more important, though, is the foundation on which Microsoft has built its business. The company has completed a major shift of much of its business model, and that makes it a long-term buy for your retirement portfolio.

What has Microsoft done?

Transformation is hard. When a company succeeds in making money in one way, it’s very difficult to transition to doing so another way. Microsoft, under CEO Satya Nadella, has managed to do just that by changing its business in a number of ways.

First, the company took most of its software products — Office, most notably — and made them subscription-based. Consumers pay an annual fee for access to programs like Word, Outlook, and PowerPoint, which locks in recurring revenue.

Under the company’s old model, it sold these programs outright. That allowed businesses or individuals to pay a larger fee up front but hold onto the software longer before upgrading. Now, subscribers pay a more modest fee each year and get updates for free.

That gives the company predictable revenue. Its cloud business follows a similar model, though that’s a newer division and an area Nadella has grown himself, not one he revived.

The second biggest change for the company was that it stopped acting like it had a monopoly. For many years, Windows was essentially the only affordable game in town. Yes, Apple existed, but Macs were expensive and not a true alternative for most people.

Android, the advent of cheap tablets, and the rise of smartphones that could do computer-like things are what ended the Windows monopoly. Consumers could avoid Windows and the Office suite, which greatly weakened Microsoft’s business.

Former CEO Steve Ballmer was slow to adapt. He continued business as usual, though he did start to enact some changes late in his tenure. Nadella embraced the new reality, taking the company’s products and put them on any platform that would have them. In addition, he quickly acknowledged the failure of Windows 8, dropped the failed Windows phone, and embraced inexpensive Windows-based tablets.

Nadella changed the company into a modern, nimble technology giant with a locked-in revenue base and the ability to sell its products across multiple platforms.

Microsoft is built for the long term

Microsoft has increased its dividend by over 50% over the last five years, and it’s reasonable to believe that will continue because the company has such a strong foundation. Nadella is an inspiring leader who understands why his company has been successful.

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” said Nadella in the company’s fourth-quarter earnings release.

Every day we work alongside our customers to help them build their own digital capability — innovating with them, creating new businesses with them, and earning their trust. This commitment to our customers’ success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack.

Notice how Nadella put the focus on the customer. That’s a sign that he fully understands Microsoft needs to serve its audience above everything else. Investors can’t ask for anything better. You have a company with solid recurring revenue, multiple products people want and need, and a leader who understands that you have to constantly evolve. That powerful combination should deliver steady growth, somewhat predictable results, and steady dividend payouts.

The post Why Microsoft Is a Great Dividend Stock appeared first on The Motley Fool Canada.

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Netflix (NASDAQ: NFLX) has a lot of content but relatively few hits. That could be a major problem for the streaming giant as it faces new competition from Walt Disney‘s (NYSE: DIS) Disney+, which will launch with a lineup of originals that may be somewhat light on volume but heavy on big-name properties.

It could also pose a challenge for Netflix, which has taken more of a “throw everything at the wall and see what sticks” approach. The content giant has, of course, had some major successes like Stranger Things. But for every hit, the tech giant has a whole bunch of shows that seem to exist mostly to clutter up the service.

Some of those shows may have niche followings or be a major draw to some segment of the audience, but few make significant impressions. The Disney+ lineup differs in that every show on the platform seems like an effort to reach a broad audience.

What Is Disney doing?

Disney is essentially following the same model it uses for its movie business. It’s leaning on popular intellectual property (IP) that consumers are familiar with. The company laid out the first year lineup in a press release:

• The Falcon and The Winter Soldier: Starring the Captain America sidekicks
• WandaVision: Two more Avengers getting their own adventures.
• Marvel’s What If…? A non-canon look at major moments for various Marvel characters if they had gone a different way.
• Into the Unknown: Making Frozen 2: A documentary on the making of the sequel to the massively popular film.
• Forky Asks a Question: An animated short series starring the popular Toy Story character.
  
• The Mandalorian: A live-action show in the Star Wars universe about a Boba Fett-like bounty hunter.
• Star Wars: The Clone Wars: A final season of the beloved animated series.
• High School Musical: The Musical: The Series: The name sort of tells the story there.
• Untitled Cassian Andor series: Another live-action Star Wars show.
• Loki: Tom Hiddleston reprises his film role.
• Monsters at Work: A series featuring the Monsters Inc. characters.

Those aren’t the only shows the company will release. It also has a documentary series starring Jeff Goldblum and one that focuses on the animals who live at Disney’s Animal Kingdom. There are a few other series planned, but as you can see from the list above, pretty much every show is a potential hit.

It’s hard to see any of these programs not finding an audience, aside from maybe the Goldblum series. Disney can, of course, fail, and it occasionally has a box office misstep. But making movies that are sequels, brand extensions, or spinoffs of popular properties works.

Should Netflix be worried?

Disney has multiple shows on that list that would appeal to fans of The Avengers, Star Wars, or its Pixar animated films. Those are some of the biggest franchises in the world and generally deliver huge audiences. That should translate into highly anticipated shows that drive subscription membership.

Netflix has comparably few hits. Stranger Things may be its only show that drives the sort of buzz most of the Disney shows will, and many of the network’s other successes are either nearing their ends or have already ended.

The streaming leader still has lots of draws. Its a comedy special powerhouse, and it has a strong library of past hits (which Disney admittedly has as well). Netflix also has an awful lot of content, but that’s not always a positive — searching for something worth watching can be a challenge.

Consumers may be willing to drop Netflix if it doesn’t have a show they are currently watching. If that happens and they go to Disney+ with its steady lineup of familiar fare, it might be hard to win them back.

The post Here’s Why Netflix Should Worry About Disney+ appeared first on The Motley Fool Canada.

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Instead, the chain has partnered with Alibaba (NYSE: BABA) to offer voice ordering and delivery through Alibaba’s smart speaker, Tmall Genie — but only in China. Customers can order whatever beverage or food items they want simply by talking to their phone, tablet, or computer for delivery within 30 minutes.

Why is Starbucks doing this?

In the United States, Starbucks has been a technology leader. Its app pioneered mobile ordering and payment — something its chief rivals have copied — and it has generally been ahead of the competition.

The U.S. market, it should be noted, is still rooted in customers going to a store and picking up their order. Some of those consumers order first via the app and pick up their items without waiting in line, but many still order from a barista and pay via cash or credit card instead of having a card scanned in the app as they check out.

Delivery has not been a big part of the offering in the U.S. Starbucks does deliver — especially in larger cities where it has a partnership with Uber Eats. But the chain has done little to market delivery as an option to much of its customer base.

In China, however, the coffee giant faces Luckin Coffee (NASDAQ: LK), a digitally driven competitor that’s rapidly expanding. Most Luckin stores offer limited seating and are built around a mobile order-and-pay model. In fact, all transactions at the Starbucks rival, which currently has a slight lead in total store count, must take place through its app.

Luckin does not offer voice ordering, and adding it may give Starbucks a convenience edge. That may be needed, as Luckin has been very aggressive when it comes to pricing, using heavy discounts to gain customers.

For both companies, it’s important to become the ingrained favorite for customers. Consumers pick their favorites based on taste, price, and, of course, convenience. Being able to ask your digital assistant to get you a cup of coffee — much like you might ask a human assistant to do — is very convenient.

A sign of things to come?

While about one-third of Americans utilize a voice-controlled digital assistant in an average month, it’s fair to say that such technology has not really been used to its full potential. Siri might play music for us and Cortana may offer directions, but few people use either one to order food (even though a few chains offer that capability).

If this works in China, it’s logical to expect Starbucks to bring the technology (or at least something similar) to the U.S. The company has been working to optimize its stores to improve the customer experience. Allowing people to order using their voice and a digital assistant furthers that mission as long as Starbucks can figure out how to make it easy (and not frustrating).

Getting the experience right in China first makes sense. Once that happens, it seems inevitable that this type of integration will be added in at least the parts of the U.S. where Starbucks offers delivery.

The post Is This Starbucks Move a Sign of Things to Come? appeared first on The Motley Fool Canada.

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The online retail giant has planned what it calls an “Amazon Career Day” for Tuesday, Sept. 17. Comprising a series of hiring events across the United States, the Career Day will offer information “about the 30,000 full and part-time jobs available at Amazon in locations across the country, from the company’s headquarters and tech hubs to datacenters and fulfillment centers,” according to a press release.

These events won’t just be about hiring warehouse workers — though a lot of the positions will be entry-level fulfillment center jobs, there will be positions across the company’s entire spectrum. The challenge for the company, of course, isn’t filling higher-paying office jobs, it’s getting people to take its $15 an hour entry-level warehouse, fulfillment, and customer service jobs.

Do entry-level workers need Amazon?

Amazon needs people, but, at least in some markets, people may not need Amazon all that much. Job openings continue to climb, and unemployment sits near all-time lows. Perhaps most importantly for Amazon, wage growth has been strong for some of the positions it hopes to fill.

The latest data from Glassdoor showed that the median salary for warehouse workers had climbed 4% to $44,112, while customers service representatives saw their pay jump by 3.7% to $38,243. That’s well above the $31,200 a $15 an hour Amazon employee makes.

Of course, $15 an hour is only the low point for Amazon hourly wages, and many workers do earn more — but in a competitive market, the online giant’s reputation may hurt it. Only 66% of Amazon warehouse workers would recommend the job to a friend, according to information from Glassdoor, and only 70% of customer service reps would do the same.

That’s better than Walmart (NYSE: WMT) (63% for warehouse workers and 59% for customer service representatives), but well below Costco (NASDAQ: COST) (91% for warehouse workers and 93% for customer service representatives). Target (NYSE: TGT), which like Walmart does not pay a $15 minimum wage, has only 70% of its warehouse workers and only 54% of its customer service representatives willing to recommend the job to a friend.

What does this mean?

Amazon may have an edge when it comes to filling entry-level jobs over Walmart and Target because it pays a higher minimum wage. At $11 and $13 an hour, respectively, those two retailers pay well less than their online rival — probably enough less for Amazon to overcome any worker reticence.

But when Amazon competes with a well-regarded employer that pays at least $15 an hour, as Costco does, it’s going to struggle to hire employees. Wages, of course, are not everything — benefits matter, and Amazon points out in its press release that “All candidates will have access to on-the-job training and upskilling opportunities as part of the company’s $700 million Upskilling 2025 initiative to help employees gain new skills to build their career.”

Where Amazon is hurt is that there have been numerous stories about challenging worker conditions in its warehouses. The company has refuted those allegations, but the media reports and the availability of other options may be a drag on hiring for the online leader.

Walmart, Target, Costco, and others have varying training opportunities and benefits packages for workers to weigh. Amazon is being aggressive and getting into hiring mode before the holiday season hits (the retailer will have a separate set of openings for seasonal positions). That’s a smart play, but the company may come up short in markets where workers have the option to make the same money for companies that have built better reputations for treating workers well.

The post Amazon Wants to Hire 30,000 Workers. Will It Succeed? appeared first on The Motley Fool Canada.

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