Updating your Conservative-Growth Payers: IBM Corp.

Article Excerpt

INTERNATIONAL BUSINESS MACHINES CORP. $125 is a buy for long-term gains. The company (New York symbol IBM; Conservative-Growth Dividend Payer Portfolio, Manufacturing & Industry sector; Shares o/s: 887.9 million; Market cap: $111.0 billion; Divd. yield: 5.2%; Divd. Sustainability Rating: Above Average; www.ibm.com) raised its quarterly dividend by 0.6% with the June 2020 payment. The new annual rate of $6.52 a share yields a high 5.2%. On July 9, 2019, IBM completed its acquisition of Red Hat Inc. for $34 billion. Red Hat is a leading developer of software for cloud-based computing systems. (Cloud systems let users access computer programs online and store files on a company’s remote servers.) Despite new operations, IBM’s revenue in the three months ended June 30, 2020, fell 5.4%, to $18.12 billion from $19.16 billion a year earlier. Weaker demand for the company’s legacy operations, partly due to COVID-19 disruptions, offset strong growth from its cloud operations (up 30%). However, lower earnings from those legacy businesses caused IBM’s earnings (before one-time items)…

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