FINSUM + Magnifi: The Next Great Dividend Play

August 4, 2021

It sounds silly to call one of the oldest blue chips a “next great dividend play”, but given its recent history it feels appropriate. You might have almost forgotten about it, but IBM has been on a rally ever since its last quarterly earnings update. The real play here is to make the computer giant an income piece. The first big reason to go after IBM is its growing cloud-based computing, which has continued to grow at a double-digit pace giving good prospects for the future. The next reason for the IBM dividend pay is the cash flow. They already have generated $2.56 billion in free cash flow more than covering their shareholder dividends of $1.47 billion, and they have made structural changes to bolster finances moving forward. Finally, most tech giants have wonderful balance sheets but for IBM that isn’t the case. The good news is they are making tremendous progress as they reduced liabilities by $6.3 billion this year.

(New York)

FINSUM + Magnifi: IBM doesn’t make sense as a wonderful growth opportunity but it does make a smart
dividend play in the second half of 2021.

Other news today: Regulations Cause Further China Woes and Goldman Sachs Gets Very Bullish on this AssetNew call-to-action

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