A quarter-century ago, back in the dot-com era, IBM (NYSE:IBM) would have been a “Magnificent Seven” member if that term had existed. Nowadays, however, some investors ignore IBM as a legacy technology business. In contrast, we consider IBM stock to be a prime choice for momentum and yield, and we’re assigning it an “A” grade.

IBM is an underappreciated innovator in a number of niche technology areas. We encourage you to discover – or maybe re-discover – IBM as an investable business in the 2020s.

IBM: Financially Strong and Still a Tech Leader

From a financial standpoint, IBM is growing in all the right ways. In 2023’s fourth quarter, IBM grew its revenue 2% year over year to $61.9 billion. Plus, the company increased its GAAP gross profit margin by 1.4 points to 55.4%. IBM improved its free cash flow by $1.9 billion to $11.2 billion.

Moving beyond the company’s financials for a moment, IBM is also highly active in multiple technology fields. Here’s a sample of what IBM has done recently:

• Introduced LinuxONE 4 Express, a robust, cybersecurity-enhanced hybrid-cloud and artificial intelligence (AI) platform
• Launched an entry-level cybersecurity certificate with nonprofit cybersecurity-professional organization ISC2
• Teamed up with Korea Quantum Computing to develop quantum-computing technology
• Opened a cyber-response training facility in Washington, D.C.

Along with all of that, IBM committed to invest “up to $45 million in cash and in-kind donations of technology and services” toward sustainability initiatives over the next five years. Even if IBM is a “legacy” business, it’s still as modern as ever.

Choose IBM Stock for Momentum and Yield

Now you have many reasons to like IBM as a business, but what about IBM stock? Is it a loser or a winner this year?

IBM shares have actually provided some magnificent returns recently, even if IBM isn’t called a “Magnificent Seven” company. In several months, the stock has rallied from the low $160s to nearly $200.

That’s not too shabby for a stock that some critics might pigeonhole as just a defensive investment for retirees. There’s nothing wrong with being a retiree, and whether or not you’re retired, you can still collect decent dividends from IBM.

Generously, IBM offers a forward annual dividend yield of 3.38%. This easily beats the technology-sector average dividend yield of just 1.025%. Go ahead and research the dividend yields of the “Magnificent Seven” companies, and you’ll have a hard time finding one that surpasses what IBM has to offer.

IBM Stock: Much More Than Just a Defensive Play

IBM was a superstar in a former era, but what about 2024? Should you consider investing in IBM only as a defensive/dividend play?

It’s fine to appreciate IBM as a relatively safe, yield-bearing business to invest in. However, IBM is a financially firm business that’s on the vanguard of multiple technology-niche fields. For all the reasons we’ve cited today, IBM stock is a strong pick this year, and it earns an “A” grade.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.