IBM – Boosting our Tech position
IBM – Boosting our Tech position
Good Morning
Hope everyone is having a fantastic long weekend. We decided to not go away, but work around the house. Our siding project is finally finished. (what a nightmare, job started in April) So now on to the next projects – working on the deck, replacing some broken fence posts, gardens, beers etc. What have you been up to?
New Purchase
Anyways we had some more money to deposit into the RRSP account. Given the ex dividend date is next week and I feel it’s currently a great deal we bought 18 shares of IBM for 144.86 per share – just above the 52 week low..
About IBM
This is by far the most expensive individual stock we own now and kinda sucked spending all that money on just 18 shares. haha At this current price it offers a whooping 4.13% yield. Yup for a tech stock! It will also add $108 to our forward dividends. While the analysis’s are all over the map with a fair value ranging from $140 – $220 per share, Morning star gives a fair value of 158$ per share. Unfortunately at the moment we are not rich enough to drip this stock (Rbc only offers full share drip’s)
Solid Dividend Growth Stock
After they boosted the dividend 7.1% this year, IBM has now increased its dividend annually for 22 years in a row, and it’s paid a quarterly dividend uninterrupted since 1916.
While the stock has fallen pretty drastically since February. (over 180 to now) I have read they will bring in big revenues the 2nd half of the year. I also believe Artificial Intelligence is the future and feel IBM is progressing along nicely in this field. BNN talked about IBM awhile back and some guy was saying IBM had the best voice recognition software for future A.I. (This could be different now though)
I feel the market still has bargains out there, IBM maybe one of them. Sitting at close to 52 week lows, offering a massive tech yield, and is a solid dividend growth stock. I’m happy to add IBM to the portfolio!
Have a great weekend and keep on bumping those passive income numbers!
Hey I’m Rob, creator of Passive Canadian Income.
In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.
Hey PCI,
that’s good timing again…i like IBM and their solid numbers. I think they’ll master the transition phase they’re going through. Unfortunately i bought them before the price went south fast. But in the long run, this won’t matter much, i think. If they miss again next quarter with revenue and drop some more, i think about adding some shares to my position…
Best Regards,
DividendSolutions
Hey solution thanks for the boost of confidence. Yeah i wasnt sure to hold off until after the report for another pullback but if they put up some good numbers the stock should propel. Cheers
It’s always tough to say what will be successful in tech. One day you can be on the top, the next, you’re on the bottom without a dollar to put into your bank account. That being said, IBM is a leader in the industry. I just wonder how many more times they’ll be able to innovate before smaller firms overrun them. Afterall, the power of the masses always eventually topples the monolith.
Hmmmm interesting take. Tech is always a risky industry but being in business over 100 years got to bw worth something
OK PCI, well I suppose time will tell & good luck with this one.
Being the blunt old fella that I am, I don’t like IBM for the reason a) it isn’t the power house that it once was, b) the up & down price. A $10,000 investment back in 2007 is now worth approx $16,000 & that includes the DRIP factored in. IBM last stock split was 1999.
FWIW, my choice would be BCE rather than IBM
If it’s ‘Tech’ that you are after, then go with a index ETF
http://etfdb.com/etfdb-category/technology-equities/
Interesting why bce? I feel like they dont have much growth potential at the moment.
PCI –
Haven’t seen an IBM purchase in a while! What was the one major factor in purchasing them? Near the 52 week low and the yield at a place it’s never been? OR do you look forward to a shift in their business strategy, and post-divestitures, see revenue growth returning?
-Lanny
Hey i feel right now ibm is just getting torn up. They have missed alot i
Of sales #s with this transition. The yield / 52 week low / history/company i think they can pull through and do well.
PCI,
Good luck on your purchase. IBM is a solid purchase and of course, only time will tell whether it can stay ahead of the tech curve. I know past performance is no guarantee of future results, but you simply cannot ignore the strength of IBMs history. It’s almost in Dividend Aristocrat status.
Hey port. Thanks i feel its history proves they can make the comeback
Thank for sharing your recent purchase!
Hey income no problem
Very nice buying at the low. I was fortunate to have had an investment account opened for me when I was 6 years old (1993) and IBM was one of the two stocks purchased for me. I’ve continued to hold IBM for 24 years (I still have it). Between capital appreciation and reinvesting, the results have been amazing over two decades. IBM has certainly taken its lumps in recent years and it will be interesting to see where it goes in the future. I plan on continuing to hold IBM. Good luck on your purchase! 🙂
Hey dynasty. Man thats great to hear and nice of someone to start ya off at age 6. Cheers
Nice buy getting it in right before the ex-dividend date. That should add a nice bit of dividend income for you. Are you worried at all that Warren Buffett sold a big portion of his IBM stock a little while back? If anything, it helped to drive the price down so far to make it a nice entry point for everyone else. They have a good background though, so should be around for a while.
Hey daze like u mentioned his selloff definally helped lower the price. Im not too worried. I think their move towards a.i is a great one.
IBM pros:
-strong company with big potential
-good dividends
-strong buy back share program
-shares price is low but the trend is downward… better buy in 2, 3 orders if this is the intention
IBM cons:
-all the fundamentals: income, EPS, book value, cash flow… almost didn’t change in the last 10 years or some are even lower
-they are operating on a market segment which is very competitive and too many companies
-they do not have a specific/unique product as Microsoft, Apple, Intel, even Cisco…
-the existing ratios are little better compared to last 5 years but worse then 10 years ago… which says that the price is overvalued if you compare to 2007-2009
Unless they will come with something new, l don’t thing that IBM will perform better then other tech companies…
In my opinion, Intel (probably the best fundamentals), Apple, Microsoft will do better in the future…
Or, as John mentioned, buy an ETF… one of the best canadian ETF is ZQQ…
Hey cris thanks for your opinion. Seems like quite a few people are beating on ibm. You never know. I bought richie bros when it was on sale and getting bashed its up over 10% today already
cris that was a good analysis. ZQQ is another way to buy tech stocks. Seems the latest buzz around is money is moving out of tech to healthcare & financials. Anyone in a single tech stock or ETF has to keep monitoring their positions because nothing is forever. Fund managers continually move in & out of holdings and/or hedge positions.
I did more search into these stocks and here are my conclusion:
-APPLE – best value of all – the intrinsic value is over $200 and definitely is having the fastest growing… Also, all fundamentals looks better if compare with other companies. Any correction will be a bonus to get in.
-INTEL – the second best fundamentals… if you get the stock between 30-34 you get ~30% margin to the intrinsic value
-GOOG – fast growing revenue but no dividends. I like more ompanies who paying dividends… A price under $800 will give you more margin
-CISCO – fair value at $31-33… a price under 30 gives you less risk
-Microsoft – overvalued… a price around $55 will be more acceptable… slow but stable growth
-IBM – overvalued – a fair value around $120… too much debt and no growth in revenue, cash flow and book value
-Amazon – I will stay away… the price of $1000/share do not have any sustainability… only hope… P/E 279, P/B 20… only Amazon and Netflix are like this… compare with Apple P/E 18 and P/B 6… and the real earning per share is double then Amazon.
Indeed the tech stocks are less predictable but, I like to be realistic in the expectations… also I like to see support for the price I pay…. old style I suppose.
Just to clarify, when I do my analyses I look to the last 10 years results (not 2 or 5) and I try to be conservative in my approach.
Hey cris thanks alot for this!
IBM gets beat-up from lots of bloggers, but I like this stock. Good buy at this price in my opinion.
Woot woot thanks for the vote of confidence hunting! Cheers