Among all the notable technology stocks on the market today, Apple (AAPL, Financial) gets the most coverage. Apple has been in the limelight of public domain for over a decade! That Apple gets mentioned more frequently in the news and by analysts than any of the other technology companies such as Intel (INTC, Financial), Microsoft (MSFT, Financial) and International Business Machines (IBM, Financial) isn’t surprising, perhaps because Apple is a lot bigger and better on a performance scale than their competitors. There is no doubt that Apple has been an investor’s delight for over a decade, yet the stock isn’t immune against market volatility as market record shows that Apple once declined from about $200 to below $80 a unit when economic recession heightened in 2008.
While Apple may have been the best among the tech stocks in terms of financial performance, IBM remains the best stock on the scale of dividend performance. IBM is the only tech company that has consistently maintained a good rating for consistent yearly dividend increases for the past decade. In addition, IBM has grown its annual revenues consistently by over 10 percent since 1997, which is unmatched by any other tech company. Indeed, Apple can’t match IBM’s penchant for consistent dividend increases, because presently, the bulk of its cash flow and revenues are made overseas and repatriating its cash from abroad may attract a rather punitive tax rate of up to 30 percent.
Comparing IBM with Microsoft is another task many people, including experts, would have thought easy a decade ago, particularly in favor of Microsoft. However, IBM has outshined Microsoft on performance basis over most of the last ten years with about 88 percent gain compared to a loss of 47 percent recorded by Microsoft. Between 1986 and 2000, Microsoft won the race with a landslide gap of over 600 folds compared to IBM’s 30 percent gain, but that was as far as Microsoft could go. IBM has been the toast ever since then with its strongest gain recorded in the last three years.
Intel is another stock which has been unfairly knocked down by the Wall Street analysts, simply because it hasn’t been able to grow its earnings to the level that hedge fund and institutional fund managers expected. In fairness, Intel deserves to be given the benefit of the doubt, just as IBM, which has been great at meeting its financial targets but that the Wall Street experts don’t consider adequate in comparison with Apple’s earnings. On a serious note, IBM as well as Intel satisfies the basic requirements most investors want to get from income stocks. IBM recently reported its financials that outshined analysts’ earnings per share projections by almost 3 percent, though it missed revenue target experts were expecting by a 3 percent margin.
IBM’s recent quarter results show an increase in its operating margins. Its gross earnings rose by about 48 percent to attain 140 points basis while its pre-tax and profit margins were up by 21percent and 16 percent respectively. IBM recently increased its quarterly dividend by over 13 percent to $0.85 per share from $0.75 per share. Compared to its direct competitors, IBM’s dividend growth rate tops the industry average by 16.33 percent. Since year 2000, IBM has returned over $137 billion to its shareholders through a systematic process of share buybacks and generous dividend payouts. Likewise, Intel maintains earnings and dividends yield of about 9 percent and 3 percent respectively while its earnings per share has been strong for the last 5 fiscal years. Intel also recorded 14 percent earnings growth in its fiscal year from 2010 to 2011, but Intel’s main constraint presently is the high demand of consumers for tablet over PC.
Meanwhile, IBM is rumoured to be making efforts to acquire the enterprise unit of the financially strapped BlackBerry maker, Research In Motion (RIMM, Financial). Though further details are still sketchy, some analysts have considered the move as mutually beneficial, but it is reported that the decision to consummate the rumoured deal may have to wait until 2013 when RIMM’s BlackBerry 10 should have been launched to gauge the market if it swings in favor of RIMM or not.
I recommend IBM stock on the ground that its strong and steady growth with exciting cash flow will enable the company to continue to sustain its impressive returns and good dividend payouts to shareholders for many years to come.
While Apple may have been the best among the tech stocks in terms of financial performance, IBM remains the best stock on the scale of dividend performance. IBM is the only tech company that has consistently maintained a good rating for consistent yearly dividend increases for the past decade. In addition, IBM has grown its annual revenues consistently by over 10 percent since 1997, which is unmatched by any other tech company. Indeed, Apple can’t match IBM’s penchant for consistent dividend increases, because presently, the bulk of its cash flow and revenues are made overseas and repatriating its cash from abroad may attract a rather punitive tax rate of up to 30 percent.
Comparing IBM with Microsoft is another task many people, including experts, would have thought easy a decade ago, particularly in favor of Microsoft. However, IBM has outshined Microsoft on performance basis over most of the last ten years with about 88 percent gain compared to a loss of 47 percent recorded by Microsoft. Between 1986 and 2000, Microsoft won the race with a landslide gap of over 600 folds compared to IBM’s 30 percent gain, but that was as far as Microsoft could go. IBM has been the toast ever since then with its strongest gain recorded in the last three years.
Intel is another stock which has been unfairly knocked down by the Wall Street analysts, simply because it hasn’t been able to grow its earnings to the level that hedge fund and institutional fund managers expected. In fairness, Intel deserves to be given the benefit of the doubt, just as IBM, which has been great at meeting its financial targets but that the Wall Street experts don’t consider adequate in comparison with Apple’s earnings. On a serious note, IBM as well as Intel satisfies the basic requirements most investors want to get from income stocks. IBM recently reported its financials that outshined analysts’ earnings per share projections by almost 3 percent, though it missed revenue target experts were expecting by a 3 percent margin.
IBM’s recent quarter results show an increase in its operating margins. Its gross earnings rose by about 48 percent to attain 140 points basis while its pre-tax and profit margins were up by 21percent and 16 percent respectively. IBM recently increased its quarterly dividend by over 13 percent to $0.85 per share from $0.75 per share. Compared to its direct competitors, IBM’s dividend growth rate tops the industry average by 16.33 percent. Since year 2000, IBM has returned over $137 billion to its shareholders through a systematic process of share buybacks and generous dividend payouts. Likewise, Intel maintains earnings and dividends yield of about 9 percent and 3 percent respectively while its earnings per share has been strong for the last 5 fiscal years. Intel also recorded 14 percent earnings growth in its fiscal year from 2010 to 2011, but Intel’s main constraint presently is the high demand of consumers for tablet over PC.
Meanwhile, IBM is rumoured to be making efforts to acquire the enterprise unit of the financially strapped BlackBerry maker, Research In Motion (RIMM, Financial). Though further details are still sketchy, some analysts have considered the move as mutually beneficial, but it is reported that the decision to consummate the rumoured deal may have to wait until 2013 when RIMM’s BlackBerry 10 should have been launched to gauge the market if it swings in favor of RIMM or not.
I recommend IBM stock on the ground that its strong and steady growth with exciting cash flow will enable the company to continue to sustain its impressive returns and good dividend payouts to shareholders for many years to come.
