If you were thinking about investing in it, IBM (NYSE:IBM) stock looks fairly cheap right now. Its dividend yield is now very high at 4.6%, assuming its $6.48 annual rate stays unchanged. And now that IBM’s $34 billion purchase of Red Hat has closed, the dividend is looking even more secure.
In a presentation to analysts on Aug. 2, IBM showed that Red Hat would raise IBM’s free cash flow by about half a billion dollars in 2020 and $1 billion in 2021, after interest costs from the purchase. This is important, since as I pointed out in my previous article on IBM, the company has stopped its buyback program in order to pay down the acquisition debt and maintain the dividend.
Source: InvestorPlace
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