IBM Offers Shareholders 3.2% Quarterly Dividend Boost (IBM)
By: Ned Piplovic,
The International Business Machines Corporation (NYSE:IBM) continued its two-decade-long streak of consecutive dividend hikes with a 3.2% quarterly dividend boost.
IBM has been distributing dividend income payments to its shareholders for more than a century. Adjusted for stock splits, the company has delivered at least one quarterly dividend boost per year since 1997. Over that period, IBM has enhanced its total annual dividend distribution amount more than 15-fold.
In addition to offering its shareholders a steady supply of rising-dividend income, IBM also delivered robust long-term asset appreciation. Since the beginning of the current consecutive dividend hikes streak in 1997, the company advanced its share price nearly seven-fold before reaching its all-time high of $215.80 in mid-March 2013. The share price has experienced increased volatility and a pullback of nearly 35% since the all-time high. However, IBM has been restructuring away from computer hardware manufacturing and towards establishing itself as a leader in new technologies. IBM focuses on delivering technology solutions for cloud storage, Artificial Intelligence (AI), data analytics, as well as blockchain and digital solution for farming.
Even the steady streak of annual dividend hikes was unable to offset the 35% share price decline over the past few years. While existing long-term shareholders suffered losses, new investors might see the current price falloff as an opportunity to take a long position in the IBM stock at discounted prices and collect rising-dividend income until the price rebounds.
IBM generally distributes its dividends on the 10th of March, June, September and December. Typically, the dividend record date is approximately one month prior to the pay date. The upcoming round of dividend payouts falls in line with these guidelines. All interested investors looking to collect the next payment of dividend distributions must claim stock ownership before the May 9, 2019, ex-dividend date. On the upcoming June 10, 2019, pay date, IBM will distribute its next quarterly dividend to all shareholders of record.
International Business Machines Corporation (NYSE:IBM)
Headquartered in Armonk, New York, and formed in 1911 as the Computing-Tabulating-Recording Company, the International Business Machines Corporation assumed its current name in 1924 and operates as an integrated technology and services company worldwide. The company’s Cognitive Solutions segment offers Watson — a cognitive computing platform that interacts in natural language, processes big data and learns from interactions with people and computers. In addition to Watson, this segment also offers data analytics solutions and transaction processing software that runs mission-critical systems in banking, airlines and retail industries. The company’s Global Business Services segment offers business consulting services, application management services for packaged software applications, as well as finance, procurement, talent engagement and industry-specific business process outsourcing services.
Additionally, the Technology Services & Cloud Platforms segment provides cloud and outsourcing services, as well as technical support and integration software solutions. The company’s Systems segment offers servers, data storage products and the z/OS enterprise operating system. IBM’s Global Financing segment provides lease, installment payment plans, loan financing services and short-term working capital financing to suppliers, distributors and resellers, as well as remanufacturing and remarketing services.
After boosting its dividend payout for 22 consecutive years, IBM rewarded its shareholders with a 3.2% quarterly dividend boost for the upcoming round of dividend distributions. IBM’s current quarterly dividend boost raised the payout from $1.57 in the previous period to the current $1.62 dividend amount. This new quarterly payout is equivalent to a $6.48 annualized distribution and a 4.6% forward dividend yield. The current yield is nearly 27% higher than IBM’s own 2.6% five-year yield average.
In addition to outperforming its own five-year average, IBM’s current yield is nearly five-fold above the 0.94% average yield of the entire Technology sector. The 4.6% current yield is also almost 140% higher than the simple average yield of the Diversified Computer Systems industry segment, as well as 20% above the 3.85% yield average of the sector’s only dividends-paying companies.
Since its most recent stock split in 1999, IBM has delivered at least one quarterly dividend boost per year and enhanced its total annual dividend amount more than 14-fold. That pace of dividend advancement converts to an average growth rate of 13.7% per year. IBM even managed to maintain a double-digit percentage growth rate over the more recent years. Over the past decade, IBM tripled its annual dividend payout amount for an average annual growth rate of 11.7%. Over the last five-year period, the annual dividend advanced 52%, which corresponds to a 10.7% average annual growth rate.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.