Why IBM Is More Than Just a Dividend Stock
Tech stocks have taken a beating this year as inflation climbed. For example, game development platform inventor Unity Software shares dropped 80%. Yet for most of 2022's first half, the stock of IBM (NYSE: IBM) fared better than many of its tech brethren, even hitting a 52-week high of $144.73 in June.
IBM defied the market's first-half downturn thanks to its rising revenue and hefty dividend, currently yielding around 5%. But the tide turned after IBM announced second-quarter earnings in July.
The stock dropped from nearly $140 per share to below $130 after the earnings release because IBM lowered its free-cash-flow guidance for 2022. Big Blue's ability to generate free cash flow (FCF) is important to the company's financial strength, including paying its dividend.
Source Fool.com
