TS2B: Tech Stocks 2 Buy, Dividends to Build On Edition with International Business Machines 11.28.20

Good morning all you Cyberpunks out there and welcome to the BCB Cyber Series that takes on the Tech stocks that can provide the cyber-fuel we need to pursue our digital wealth passions.

Today we are tackling those big dividend payers that can add passive cash flow to our portfolios. As we dig for the cyber-fuel we need, we are always working to make sure the best of the best, those monster companies in tech, can form a key portion of our balanced portfolios.

For Dividend Payers, BCB Cyber is always looking for a forward annual dividend yield of over 3% as our key, defining characteristic. Better yet, we are looking for great tech companies we can build on over time, delivering consistent value and technological prowess.

Helping to Define Technology Fueled Industries Since 1911

With some of the biggest names in information technology, International Business Machines, better known as IBM, leads the way for us today. Built on three key innovative platforms, Artificial Intelligence, Cloud Computing, and Quantum Computing, IBM is positioned like few others to help drive technology into its next society-altering breakthrough! Better still, we get that great dividend.

With a key split recently announced, IBM is set to unlock value in an already undervalued company. With a current forward P/E of 10.60, there is a lot of stored-up potential here for not only a great dividend but price appreciation.

A cash dividend payer for 104 years now, IBM has a current track record of 25+ years of consecutive dividend increases and is included with the “best of the best” dividend growth stocks.

Before we dive too deep though, we strongly advocate that we don’t act solely on anyone else’s opinion, even ours! Make sure we are all thinking for ourselves as self-definers and making our own decisions. In the end, the responsibility is on each one of us as individuals. So decide wisely!

BCB Cyber: Dividend Payer Edition

Jumping right in the BCB Cyber way, we cover 3 quick pieces of important information so we can get moving on our day. First, we tackle the story to find out who and what the company is, second, we look at the numbers both positive and negative, and finally we discuss our position on the stock.

This is TS2B, Tech Stock to Buy, Dividend Payer Edition, and this week we are going to take on IBM, the Armonk, New York tech powerhouse working to redefine artificial intelligence, hybrid cloud, blockchain and so much more!

1 – STORY

The story for International Business Machines (IBM), is one built on legacy, a commitment to the biggest fields of technological innovation and surprising value.

IBM began in 1911 and over the years has been transformed multiple times, from punch cards to introducing digital storage, IBM has long been a key player in the world of technological innovation. Even when that meant changing the product line. That story today begins with yet another opportunity to redefine itself. IBM’s merger with Red Hat, a $34 Billion Dollar merger that redefined IBM for a new age, has created a new industry behemoth in Hybrid Cloud Technology.

The addition adds to a company that already possesses incredible strength in cloud platforms. The company saw 19% growth in the sector along the last quarter pushing a revenue of $24 Billion. In addition, Red Had demonstrated a 16% percent growth rate to fuel the fire further. With margin expansion and cash generation a priority for this company, it has great legs to stand on.

In addition, due to the current climate regarding increased competition, the company has been responsive under the direction of new CEO Arvind Krishna pushing to focus on AI and Hybrid Cloud in as unique and focused drivers of growth in the company, better positioning the company for a Trillion dollar industry opportunity.

2 – BY THE NUMBERS

Turning to the numbers now, BCB Cyber loves to follow five specific metrics: Revenue Growth, Forward Price to Earnings Ratio, Return on Assets, Operating Margin, and Debt Considerations. While IBM does have a key risk factor we will consider, it does also hit on several other key metrics: solid revenue stream, a promising value proposition, a well-covered dividend, a positive Return on Assets, a positive Operating Margin, and a solid, growing cash flow alongside investment that will help with debt considerations.

A solid revenue profile…

A value proposition in current Forward P/E of 10.60 representing a discount to the market and even more significant a Price to Sales in the most recent quarter of 1.48 representing a deep value to the revenue stream!

Strong Operating Margin, one of the best we’ve seen, and a quality return on Assets…

A balance sheet that suffers under the weight of acquisitions but is not out of proportion to the company or the quality of the Red Hat addition.

Analysts have also demonstrated an undervalued nature with averages and high-end price targets being significantly above the current share price.

Finally, as a dividend payer, BCB Cyber loves to see the over 3 percent forward annual dividend yield and IBM currently has a yield of 5.25%. More importantly, during very tough times around the globe, the company has a healthy payout ratio of 73.61%.

3 – THE BCB CYBER TAKE

As of this morning, on 11.28.20, my own portfolio has a position of 9.07% with an average cost of $114.46in IBM. This is definitely a dividend payer worth buying at the right price and one that BCB Cyber believes to be the right fuel for the fire! In addition, the Red Hat opportunity is an incredible one in terms of pushing forward the future opportunities in the hybrid cloud. As always, think for yourself, do your own homework, and cyberize your life with the best in disruptive tech. Learn more in our Wealth Section and dive deeper with Establishing the Baseline!