Dividend Yield: 1.8%
Payout Ratio: 23%
YTD Performance: +4%
When we last slapped International Business Machines (NYSE:IBM) on the wrist in March, we were in the midst of an incredible run in IBM that saw shares up roughly 140% in about three years, so Big Blue got a pass.
Since then, however, IBM has been on a roller-coaster ride that saw shares drop from $210 in early April to around $180 in July, back to all-time highs at $211 just a week ago … until earnings came around.
IBM’s revenues slumped amid a weak global economy that has companies kicking tech purchases and IT services down the road — a broader theme that is being played out across the sector. Shares have fallen nearly 10% since then, and are up only 4% since January.
Considering IBM has merely confirmed guidance for the year, the growth prospects don’t look good. All of a sudden, IBM’s paltry yield — just 1.8%, representing just 23% of the company’s earnings — sticks out like a sore thumb. Maybe rather than betting the farm on share buybacks, IBM should consider spending some of its $12 billion-plus in cash and short-term equivalents on suddenly disappointed investors.