IBM ups its dividend

29 Apr 2008 | 19:04 BST

By Sylvie Barak

EXPRESSING ITS OPTIMISM about the year ahead, as well as in celebration of an excellent quarter for the company, IBM decided to give a little something back to shareholders today, by announcing a 25 per cent increase in dividend payouts.

The move was surprising considering the volatile economic environment, but IBM obviously felt it could afford it, and that it would be a good way to boost investor confidence.

The quarterly dividend increase to 50 cents a share was aptly announced at the company’s annual shareholder meeting. For the last year, dividends have been stable at 40 cents a share, but after a whopping 26 percent rise in profit and a wildly optimistic earnings forecast for the coming year, IBM must have decided it was worth its while to keep the shareholders smiling. Investors with stock as of May 9 will apparently get their payout on June 10.

Since 2006, IBM has more than doubled its dividend to shareholders, giving it a good reputation for upping payouts for 13 years straight now.

In a phone interview with Bloomberg, vice president for IBM’s financial services, Jesse Greene, said that the company was currently in the process of borrowing $10 billion which would go towards covering an $18 billion share buyback planned for sometime this year. Greene reckoned that the debt meant that the company could take advantage of tax benefits and also went a way towards upping its efficiency.

In reaction to the news, IBM shares shot up by 91 cents to $122.60. The company’s shares have already seen 13 per cent growth in the past year. No wonder the firm is feeling generous. µ

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