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On the iPhone 4S and later, you can dictate messages that will then be typed out. To do this, tap the microphone key (if the key isn’t visible enable Siri from the Settings app, then General, then Siri) next to the space bar and start speaking. Once finished, just tap Done.
To include punctuation, just speak it. For example, for the sentence “Good afternoon, how are you?” you would say, “Good afternoon comma how are you question mark.” You can even add line breaks by saying, “new paragraph.”