International Business Machines (IBM) and SHARPE INCOME

Posted on Dec 3 2014 - 4:50pm by Sharpe Trade

The original Sharpe Income post can be found here.

We continue our discussion from the last entry.

I have a bit more to discuss when it comes to managing a Fixed Income account.

Ok, maybe not a bit.  More like a lot.

I’d like to talk in the future about the different types of instruments that one can use for Fixed Income. ¬†The dividends of companies, versus the payments of bonds. ¬†When it’s time to favor equities or stocks as income paying instruments, and when it’s time to use bonds. ¬†I still have to discuss the importance, of a project like this, in having¬†constant, almost religiously regular capital contributions, each and every week¬†and if this is adhered to, how much flexibility this gives you for purchasing income producing assets. ¬†I still have to cover the fact that capital gains¬†do very much matter¬†in a Fixed Income account. ¬†I want to demonstrate record-keeping. ¬†There is a lot to get to.

But … I say all of that … to say that I’m not going to talk about that right at the moment. ¬†I will¬†be getting to it. ¬†But just not right now.

At the moment, it looks like an opportunity for an actual maneuver in the Sharpe Income account is taking shape, so I needed to take some time to talk about that.

And that opportunity is in IBM.

IBM is currently paying $1.10 in a dividend, each and every quarter, for every share bought and held. ¬†Regardless of what happens with the price of the stock, that dividend at the present time, is $1.10. ¬†They have been paying dividends on that stock since (according to what I can find) since 1916. ¬†They’ve had stock splits (this multiplies the income and gain potential on any stock over time). ¬†They grow their dividend, and have had (according to what I can find) over 19 consecutive years of growing that dividend, and the dividend payout ratio, based on EPS, is at a nice modest figure.

We can build positions, to a greater and greater degree in IBM in the future. ¬†I’d like to discuss exactly what it is the company does, as it is important to understand the instrument you are using. ¬†But that will have to wait for a bit. ¬†IBM¬†has taken a large hit recently on earnings, and the market for IBM has spent over a month digesting that move. ¬†I like the idea of picking some up here for the Sharpe Income¬†account.

IBM Daily 12_3_14

I am not yet considering IBM as purchased for the Sharpe Income account. ¬†But for the Sharpe Income Model account, I may be looking to pick up a couple of shares (just two to start) of IBM very soon, so stay tuned. ¬†We’ll see.

We continue “Sharpe Income” from in the next entry that you can find here ….

Disclosure: I do maintain long positions in IBM in my own personal Fixed Income account at a cost average of $175.70 and long in separate valuation accounts with a cost average of $185.60.  No businesses that I am associated with, to my knowledge, has any position in IBM, long or short, at this time. 

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