On last Friday I needed to make a choice between IBM and Teva Pharmaceuticals. I decided to pick the technology stock despite the fact the IBM has a higher valuation in terms of price to earnings and debt to equity ratio.
The current valuation of IBM is 14.23 and the forward P/E is at 11.25. Also the dividend yield is the lowest below all portfolio holdings. It’s at 1.84 percent. Why buying IBM?
Compared to other high quality dividend growth stocks, IBM is still cheap like most other technology companies with a higher capitalization. IBM is the biggest basic pick within the sector and every long-term dividend growth investor need some shares of the company. As of now, I had no shares of the company and needed to pull the trigger for the first position.
The second reason to take a stake of IBM is the low cyclic and higher degree of safeness. With a $200+ billion company, you have much more possibilities to grow and the self finance ratio is also much higher. IBM makes huge share buybacks while TEVA needs to increase its capital basis. As you might see below, the dividend potenital compared to earnings per share is for IBM unbelievable high.
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| Earnings and Dividends of IBM |
What makes IBM?
International Business Machines Corporation provides information technology (IT) products and services worldwide. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. The Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and technology support services.
How many shares?
I purchased 8 shares at 206.35 which resulted in a total purchase amount of $1,650.80. IBM is the thirteenth biggest stake in my Dividend Yield Passive Income Portfolio (DYPI).
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| Dividend Yield Passive Income Portfolio (Click to enlarge) |
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| Latest Portfolio Transactions (Click to enlarge) |
The DYP-Portfolio was funded virtual on October 03, 2012 with 100k. Since then, I purchased each week one stake for around 1k to 2k. Now, I still have $48.491.06 and 35 portfolio holdings.
The full portfolio income is now estimated at $1,807 per year. The average portfolio yield on cost amounts to 3.47 percent and the current yield of the portfolio is 3.20 percent.
Here is the income perspective of the dividend portfolio:
| Sym | Name | P/E Ratio | Dividend Yield | | Buy | # Shrs | Income | Value |
| TRI | 15.88 | 3.86 | | 28.90 | 50 | $64.50 | $1,688.50 | |
| LMT | Lockheed Martin C | 12.05 | 4.26 | | 92.72 | 20 | $89.00 | $2,147.20 |
| INTC | Intel Corporation | 12.32 | 3.59 | | 21.27 | 50 | $44.25 | $1,229.50 |
| MCD | McDonald's Corpor | 17.93 | 3.11 | | 87.33 | 15 | $45.15 | $1,474.20 |
| WU | Western Union Com | 9.89 | 2.74 | | 11.95 | 100 | $45.00 | $1,665.00 |
| PM | Philip Morris Int | 17.69 | 3.65 | | 85.42 | 20 | $67.18 | $1,841.80 |
| JNJ | Johnson & Johnson | 22.94 | 2.95 | | 69.19 | 20 | $49.80 | $1,698.20 |
| MO | Altria Group Inc | 16.57 | 4.83 | | 33.48 | 40 | $69.20 | $1,446.00 |
| SYY | Sysco Corporation | 19.41 | 3.29 | | 31.65 | 40 | $44.00 | $1,350.40 |
| DRI | Darden Restaurant | 16.26 | 3.75 | | 46.66 | 30 | $60.00 | $1,626.90 |
| CA | CA Inc. | 13.52 | 3.57 | | 21.86 | 50 | $50.00 | $1,457.00 |
| PG | Procter & Gamble | 17.21 | 2.98 | | 68.72 | 25 | $57.20 | $1,943.75 |
| KRFT | Kraft Foods Group | 19.97 | 3.68 | | 44.41 | 40 | $80.00 | $2,174.80 |
| MAT | Mattel Inc. | 19.27 | 2.91 | | 36.45 | 40 | $51.60 | $1,807.20 |
| PEP | Pepsico Inc. Com | 20.92 | 2.67 | | 70.88 | 20 | $43.60 | $1,650.20 |
| KMB | Kimberly-Clark Co | 20.96 | 3.22 | | 86.82 | 15 | $46.50 | $1,456.80 |
| COP | ConocoPhillips Co | 10.05 | 4.26 | | 61.06 | 20 | $52.80 | $1,246.40 |
| GIS | General Mills In | 17.36 | 2.78 | | 42.13 | 30 | $39.60 | $1,442.40 |
| UL | Unilever PLC Comm | 20.86 | 3.08 | | 39.65 | 35 | $44.91 | $1,464.05 |
| NSRGY | NESTLE SA REG SHR | 18.77 | 3.26 | | 68.69 | 30 | $65.31 | $2,023.80 |
| GE | General Electric | 17.32 | 3.08 | | 23.39 | 65 | $46.80 | $1,550.90 |
| ADP | Automatic Data Pr | 23.11 | 2.44 | | 61.65 | 25 | $41.50 | $1,722.75 |
| K | Kellogg Company C | 24.38 | 2.84 | | 61.52 | 25 | $44.00 | $1,584.75 |
| KO | Coca-Cola Company | 21.34 | 2.56 | | 38.83 | 40 | $41.80 | $1,656.40 |
| RTN | Raytheon Company | 11.57 | 3.11 | | 57.04 | 20 | $41.00 | $1,348.20 |
| RCI | Rogers Communicat | 13.08 | 3.61 | | 51.06 | 30 | $48.69 | $1,343.10 |
| GPC | Genuine Parts Com | 18.33 | 2.72 | | 77.06 | 20 | $41.28 | $1,549.40 |
| TSCDY | TESCO PLC SPONS A | 216.15 | 4.37 | | 17.98 | 70 | $49.63 | $1,138.90 |
| APD | Air Products and | 16.94 | 2.78 | | 85.71 | 15 | $39.45 | $1,426.35 |
| GSK | GlaxoSmithKline P | 18.71 | 4.58 | | 52.16 | 30 | $70.38 | $1,551.30 |
| WMT | Wal-Mart Stores | 14.9 | 2.3 | | 79.25 | 20 | $34.72 | $1,526.60 |
| BTI | British American | 17.35 | 3.77 | | 114.6 | 13 | $53.82 | $1,431.56 |
| CHL | China Mobile Limi | 10.08 | 4.3 | | 55.32 | 25 | $54.95 | $1,271.75 |
| MMM | 3M Company Common | 17.14 | 2.25 | | 110.27 | 15 | $36.75 | $1,666.65 |
| TUP | Tupperware Brands | 23.68 | 2.08 | | 80.98 | 15 | $25.50 | $1,243.05 |
| IBM | International Bus | 14.05 | 1.72 | | 206.35 | 8 | $28.00 | $1,650.80 |
| | | | | | | | | |
| | | | | | | | $1,807.87 | $56,496.56 |
| | | | | | | | | |
| | | | | | | | Average Yield | 3.20% |
| | | | | | | | | |
| | | | | | | | Yield On Cost | 3.47% |
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