The Strategist

IBM to become Dividend Aristocrat

07/10/2019 - 10:17

There has been good news regarding the International Business Machines Corporation, which had previously experienced financial difficulties. Apparently, soon the company may be called a dividend aristocrat.

Patrick H~ via flickr
Patrick H~ via flickr
According to Bloomberg forecasts, the company will be able to enter the list of so-called dividend aristocrats, which include companies that have been increasing their payments for 25 consecutive years, already in 2020. It is noteworthy that the acquisition of such status occurs against the background of a five-year recession in the company's shares, during which they lost about 26% of their value.

IBM’s entry into the list of dividend aristocrats will prompt funds whose policy involves investing in such companies, for example, ProShares S & P 500 Dividend Aristocrats ETF, to add the company’s shares to their portfolio.

IBM will be the second company from the information technology sector to be included in the list of 57 companies that are dividend aristocrats. Now the sector of information technology there is represented by Automatic Data Processing Inc. alone. With the new acquisition, weight of the information technology sector on the list will increase, and will correspond to the share of energy companies.

Bloomberg experts note that energy companies have made the largest contribution to dividend growth in the second quarter of 2019. Cabot Oil & Gas, Diamondback Energy, Kinder Morgan and EOG Resources increased their payouts by more than 25%, which contributed to the growth of the sector by 6% in the quarter.

Bloomberg does not predict that any sector will exceed its dividend growth results for the third quarter of 2017 or 2018. Growth rates are expected to drop to 5.5% from 12.4% in the third quarter of 2018, while the 12-month dividend yield of companies from the list of dividend aristocrats will be about 6.02% for AbbVie and 6.16% for AT&T.


< >

Tuesday, June 25th 2024 - 11:34 Reuters learns of Shein's IPO filing in London