In a recent compilation, we ranked the top 10 Dividend Aristocrats based on yield, including International Business Machines Corporation (NYSE:IBM). Investors prioritize income, and dividend-paying stocks have historically outperformed in the long term. Dividend yield is a key factor in dividend growth, with the ability to increase dividends for 25 consecutive years without sacrificing yield. The Dividend Aristocrats Index consistently outperforms its benchmark, delivering higher yields of 2-2.9% over the past 26 years.
Besides solid returns, Dividend Aristocrats are less volatile than other asset classes, providing downside protection with a higher risk-adjusted return. Corporate cash flow remained strong in 2023, enabling companies to increase dividends. The 2023 data showed an increase in overall dividend growth, with a positive outlook for 2024. A forecast predicts $1.72 trillion in dividends by 2024.
Among dividend aristocrats, International Business Machines Corporation (NYSE:IBM) ranks ninth based on dividend yield of 3.86% as of June 25. IBM extended its dividend growth streak to 29 years with a 0.6% increase in quarterly dividend on April 30. The company reported mixed first-quarter 2024 earnings, with revenue of $14.4 billion and adjusted earnings per share of $1.68. Key challenges include pressure on consulting business, although consulting for AI-related projects is thriving. As of Q1 2024, 49 hedge funds held IBM holdings worth over $1 billion.
While IBM offers investment potential, some deeply undervalued dividend stocks may have greater potential for higher returns in a shorter timeframe. Check out Inner Monkey’s report on the stock market’s top 10 stocks to buy in Q3 2024 for more insights.
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