Is IBM Making A Statement?

IBM has made a great case for the future by increasing both their dividend as well as implementing a stock buyback plan. 

What does this mean? 

Well, let’s take a look at the total shareholder yield that is created by the following announcement:

IBM (NYSE:IBMNews) said on Tuesday it will raise its quarterly dividend by a third and its share buyback program by $15 billion, sending its shares up more than 4 percent.

As a result of the higher share buyback, 2007 earnings per share growth — excluding any gain from the recently announced sale of its printer business — could be 12 to 14 percent, which is one to three points more than its previous estimates, IBM said.

The board of International Business Machines Corp., the world’s largest computer services company, declared a regular quarterly cash dividend of 40 cents a share, payable June 9, up from 30 cents per share in the prior quarter.

It authorized $15 billion for stock repurchases, which IBM said was in addition to approximately $1.4 billion that was remaining at the end of March from a prior authorization.

Wall Street was expecting per-share profit of $6.74 for 2007, which would be a 12.3 percent gain from last year’s $6.00, according to Reuters Estimates.

We must learn from the past.

That said, take a look at what has happened to Texas Instruments since we reported the announcement of their 100% dividend increase on April 19,2007.

April 19, 2007 – $31.70

April 24, 2007 – $35.01

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