Recent Buy: International Business Machines Corp.

I added more shares to my portfolio with the purchase of International Business Machines Corp. (IBM)

9 shares @ $148.34 on 11/13/2017.

This increases my forward 12-month dividend income by $54.00 to a total of $4,530.06

I also updated my portfolio page to reflect the change.

When I bought the 9 shares, I used some of the capital from the recent sale of GE. I also used some of that capital to make my last buy of CAH. I have not bought shares of IBM in a long time. The last time I bought shares of IBM was in 11/7/14. A little over 3 Years. That is crazy how fast time flys. For the most part, IBM share price has been flat. Guess what hasn’t been flat? That’s right. IBM dividend continues to grow and I do not see that stopping anytime soon.

IBM has a dividend payout ratio of 48.5%. The company recently increased its dividend by 7.1% in April. Currently, IBM has a 5-year dividend growth rate of 13.7%. I don’t see IBM growing its dividend at the double-digit rate; however, I do see them continue to increase it at the high single-digit rate.

IBM currently has a PE of 12.8 with a forward PE of 10.9. Has you can see from the graph, Earnings are expected to increase for 2018 and 2019. This is great news because, for the past 3 years, earnings have been decreasing.

IBM is fairly valued, and I recommend it a BUY at this time. I have a fair price of $154.89 for IBM. This is a great company that finally looks like it is starting to turn around. While you wait, you can be rewarded with a 3.9% dividend yield as well as high single digit dividend growth.

Source: fastgraphs.com

What do you think of IBM? Excited about the turnaround? 

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