For the 2021 Dividend Aristocrats In Focus series, first up
is International Business Machines (IBM). Last year, IBM raised its dividend
for the 25th year in a row, making it one of the newest members of the Dividend
Aristocrats.
IBM has struggled through a prolonged turnaround effort in
the past few years. The company has invested heavily in new areas such as
artificial intelligence, data, and cloud services while attempting to divest
slow-growth legacy businesses. These efforts have had mixed results, as the
company is still having difficulty returning to growth.
However, IBM has continued to raise its dividend each year.
With a high dividend yield above 5% and consistent dividend increases each
year, IBM stock could be viewed favorably by income investors.
Business Overview
IBM is a global information technology company that provides
integrated enterprise solutions for software, hardware, and services. In the
services business, IBM is the world’s largest IT provider with 5.5% market
share. In software, IBM’s software business is mostly middleware, which is the
software layer that connects applications and devices to each other.
In hardware, IBM sells the z15 mainframes, storage, and the
Power-based servers. The company has five business segments: Cloud &
Cognitive Software, Global Business Services, Global Technology Services,
Systems, and Global Financing.
On January 21st, IBM reported fourth-quarter and full-year
financial results. For the fourth quarter, revenue of $20.4 billion declined 6%
year-over-year, or 8% adjusting divested businesses and currency fluctuations.
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