3 Days Left To Cash In On International Business Machines Corporation (NYSE:IBM) Dividend, Is It Worth Buying?
Jenifer Prater
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Have you been keeping an eye on International Business Machines Corporation’s ( NYSE:IBM ) upcoming dividend of $1.57 per share payable on the 09 June 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 09 May 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine International Business Machines’s latest financial data to analyse its dividend characteristics. View our latest analysis for International Business Machines
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment or significantly cutting payout?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
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How does International Business Machines fare?
The current trailing twelve-month payout ratio for IBM is 97.96%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 45.12%, leading to a dividend yield of around 4.40%. Furthermore, EPS should increase to $11.91, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. IBM has increased its DPS from $2 to $6.28 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes IBM a true dividend rockstar. Relative to peers, International Business Machines has a yield of 4.36%, which is high for IT stocks.
Next Steps:
Considering the dividend attributes we analyzed above, International Business Machines is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for IBM’s future growth? Take a look at our free research report of analyst consensus for IBM’s outlook.
Valuation: What is IBM worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether IBM is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here .
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.