The internal stress and magnetic properties have been measured for cobalt alloy films deposited using a range of sputter conditions. The sputter conditions affect the internal stress and the microstructure, both of which contribute to the magnetic properties of the films. Stress influences the magnetic properties via magnetostriction, while the microstructural effect on coercivity comes primarily from the degree of separation and size of the grains in the film. The effect of stress on coercivity was investigated separately by applying external stresses to the films, and magnetostriction coefficients were derived for different alloys. The change in coercivity with sputter parameters indicates that in alloys such as Co77Ni7Cr4Pt12, the microstructure has the dominant effect on coercivity.