Big Blue Gushes Green

IBM (NYSE: IBM) has been around for more than a century, and it’s setting itself up for many more decades of serious business.

The company has seen a decline in its core business due to cloudcomputing technologies, but a turnaround seems to be underway. CEO Ginni Rometty has identified high-growth, next-gen technologies such as cloud computing, artificial intelligence and mobile tech as IBM’s path forward, calling them “strategic imperatives.”

In the company’s last quarter, revenue grew by almost 4 percent year over year, helped by a 17 percent jump in strategic imperatives sales, to $11.1 billion. A whopping 49 percent of IBM’s total revenue in the quarter was generated by strategic imperatives segments.

Meanwhile, IBM’s dividend payouts have seen uninterrupted increases since 1995, through thick and thin. Over the same period, IBM spent more than $115 billion on share buybacks — another method of shoveling cash flows directly into investors’ pockets. (The company’s dividend yield was recently 3.7 percent.) Big Blue is dedicated to rewarding shareholders: It has been known to take on more debt in order to finance dividends and buybacks when cash flow runs low. That’s not an issue today, though, since IBM’s trailing-12-month free cash flow stands at $11 billion. In recent quarters, 30 percent of that cash went to share buybacks, while 50 percent was earmarked for dividend checks.