“I’ll Be Back” (Terminator), or in our case, I’ll be back to investing in dividend stocks. There are a lot of technologies companies out there. While there are many high multiple companies out there, looking for value in the space is also good.
International Business Machines (IBM) has come down a long way from its stock price of $213 to $136. This is a 36% decrease. This can be a good price to pick up a stock, especially with the general market decline. But it is not the only reason to buy a stock. With a PE of 10 and a dividend yield of 3.8%, it too also suggests a good value. Another benefit is the large position held by Warren Buffet. Investing in a company just because he did is not a good enough reason. However, his methods of investing are good and another reason to at it to our list.
A lot of the future of technology will be AI (Artificial Intelligence), or computers being able to think more and more. While this has been happening for a while, this trend will continue. A simple example is a computer playing chess. With computers becoming faster and cheaper even today, computing power will allow for more calculation to figure out more complicated problems. A large product for International Business Machines (IBM) is Watson. Watson won a Jeopardy challenge years back. Now Watson is moving into more areas such as health care. There is an argument that computers do not think at all and just use equations and lookups to figure out answer. However, this argument is not important for our investment proposal. It will allow businesses to become more efficient and make better decisions to improve operations. These profits will pay our dividends.
So with a good valuation, a good investor, and a leader in the future of AI, we have a chance for this to become a great stock in our dividend collection. As a bonus, they have been paying an increasing dividend for 20 years. So in five years, they should become a dividend aristocrat. Then we can say we own it before it was cool.
So we bought 2 shares for $280.11, including the commissions the AI told us to pay. We will start earning $10.40 to start with. As long as the AI doesn’t figure out a way to take the dividends back for itself, we plan on making a lot of money with International Business Machines (IBM).