Today we’re bringing you an excerpt from Jimmy Mengel’s The Crow’s Nest.
Jimmy has been covering dividend stocks for years now for his readers, and has posted some incredible results:
- 168% on Abbott Labs (NYSE: ABT)
- 162% on Collector’s Universe (NASDAQ: CLCT)
- 155% on CME Group (NASDAQ: CME)
- 152% on The Sherwin-Williams Company (NYSE: SHW)
- 146% on Innovative Industrial Properties (NYSE: IIPR)
- 134% on McCormick & Company (NYSE: MKC)
Read on for his analysis of a high-flying dividend tech stock for one of his readers.
Speaking of tech, Jimmy just released a new research report on another tech stock that is poised to revolutionize the electric vehicle market. You can learn about that here.
Adam English
Editor, Outsider Club
Let’s start with a Message in a Bottle that washed up on my deck…
Hey Jimmy,
What about IBM for dividends — it has as good a dividend and dividend % as a number of stocks on your list.
Please explain the exclusion.
Cordially,
Daniel D.
Thanks for writing in, Daniel. The fact that I haven’t recommended IBM shouldn’t dissuade you in the least. As you can tell from the portfolio, I’ve kept dozens of stocks for years. While it would probably be more beneficial for me to sell off some of the triple-digit gains to brag about in newsletter promotions, I’d prefer you hang on to most of the dividend stocks.
That does mean that I cannot afford to cover every stock out there — unless you can convince my publishers to pay for a team of researchers (wink, wink).
But I totally agree with you: IBM (NYSE: IBM) has been a dividend beast for years. Just look at how an IBM DRIP would have done for you over the last 20:
That’s some serious dough. An 80% return on a tech company that was murdered during the dotcom bubble, yet brushed itself off and still managed to be one of the best-performing tech stocks of the last two decades.
It has plenty in the pipeline to keep that streak going…
Last week, shares jumped over 3% after its profit forecasts came out above market expectations. Revenues for the fourth quarter grew 0.1% to $21.78 billion. Net income was $3.67 billion, or $4.11 per share, compared with $1.95 billion, or $2.15 a share, a year ago.
It was the first time in six quarters that it displayed year-over-year revenue.
Much of that enthusiasm was on the back of its high-margin cloud computing business.
Its cloud revenues grew 11% in 2019 to $21.2 billion — mainly driven by the acquisition of Red Hat.
Red Hat is the open-source leader in multinational software. It operates on a professional open-source business model based on open-source software, development within a community, professional quality assurance, and subscription-based customer support. It produces open-source code so that more programmers can make adaptations and improvements.
Open source is a decentralized software development model that encourages open collaboration. It essentially means that anyone can use the “blueprint” to expand and improve the code and share their findings with the community.
A rising tide lifts all boats…
IBM acquired Red Hat for $34 billion in July.
The partnership is interesting because it teams up the forward-thinking business strategy of Red Hat with the massive global reach of IBM.
“Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors,” said Ginni Rometty, IBM chairman, president, and CEO. “They need open, flexible technology to manage these hybrid multicloud environments. And they need partners they can trust to manage and secure these systems. IBM and Red Hat are uniquely suited to meet these needs. As the leading hybrid cloud provider, we will help clients forge the technology foundations of their business for decades to come.”
IBM (IBM) is currently shelling out a dividend of $1.62 per share, with a dividend yield of 4.54%. This compares to the computer-integrated systems industry’s yield of 0% and the S&P 500’s yield of 1.75%. In terms of dividend growth, the company’s current annualized dividend of $6.48 is up 3.18% from last year.
I think IBM will be a smart — if not sexy — dividend stock for years to come.
You can read more about IBM’s dividend history and start a DRIP here.
Godspeed,
Jimmy Mengel
Editor, The Crow’s Nest
To get more insights and full issues from Jimmy check out this special presentation from The Crow’s Nest.
