My first trade in 2023 was Microsoft. Microsoft is a great company. It has an excellent combination of profitability, growth, balance sheet power and valuation. But while it may be a great long-term hold, it’s still susceptible to the temperament of the overall market.

Despite its mega-cap size and tech industry dominance, the $1.77 trillion company has hardly slowed down. MSFT’s annual EPS increased by an average of 24% over the last three years, driven by an average revenue increase of 32.4% per year. Shares of MSFT have performed well over the last five years, increasing 220%. The current pullback is a potential opportunity to buy the dip. This is a high-quality stock with a high-quality business. Analysts expect annual EPS growth of 13% over the next five years.

Microsoft has been steadily increasing its dividend each year for more than a decade. The current dividend yield is about 1.2%.