Recent Buy

I’m looking for companies that are fairly valued, have a decent dividend yield(3% to 6%) and have a fairly long history of paying dividends consistently for 10 years or more. However, there could be some cases for exceptionally good company or a strategic buy for a very long term.

I was not expecting to pull another buy trigger this month again, however, I bought following security in the month of Jan, 2015 in my DRIP Portfolio.  This buy was probably brought forward from Feb so, my cash is running low right now however, we will see what happens in Feb, especially if Mr Market is ready to sell its goodies 🙂

1) International Business Machines Corp. (IBM)

 International Business Machines Corp. is top provider of computer products and services, founded in 1911 as Computing Tabulating Recording Company (CTR) through a merger of 3 companies: Tabulating Machine Company, International Time Recording Company & Computing Scale Company, renamed as International Business Machines (IBM) in 1924, and is headquartered in Armonk, New York. IBM operations are categorized primarily into 5 segments: Global Technology Services (GTS), Global Business Services (GBS), Systems & Technology, Software, and Global Financing. IBM has too many innumerable achievements to its credits, 5 Nobel Prize winners, 6 Turing Awards & 5 National Medals of Science,  12 research labs throughout world, and an enviable record for most patents created for 22 consecutive years.

If you’ve noticed carefully and following my blog, my 4 Portfolios do not have any technology or financial companies so far due to cataclysmic events that occurred in 2000 and more recently in 2008. However, there are few technology company like IBM that I’ve been eyeing since some time. Being a fan of Buffet, it was odd that all of my portfolios did not contain IBM since it is one of the largest holding of Berkshire Hathaway (BRK.B). Finally, I decided to add in my DRIP portfolio.

IBM is trading at very reasonable P/E ratio of 12.90 with a decent dividend yield of 2.87% and Market Cap of $151.72B. It traded at $199.21 at its 52 week high and currently at $153.31, is fairly valued in my opinion and I’m going to make it a long term hold.

I bought IBM at $151.85 on 1/21 and initiated 3.2 positions in this company. It will add $14.05 of passive income on an annual basis that I do not have to earn and work for. I consider it as a superb addition to my Portfolio, though, there are some challenges for IBM to negotiate reg restructuring.

Full Disclosure: Long on IBM.

What do you think about this buy? Do you consider it a good buy or planning to add to your portfolio.

12 thoughts on “Recent Buy

    1. Hi DivGuy,

      That’s lot of tech companies! In recent times, tech companies have started paying dividends which is a good thing and I’ll be interested in couple of them like MSFT, HPQ and AAPL. I consider IBM as more of an utilities companies providing infra support, cloud computing and services, that will grow slowly but steadily as compared to others where a change in direction of technology can significantly change the fortune quickly, however, my investment horizon is few decades. Over short term, you would be fine with high growth tech companies. Appreciate the link and comment.

      Thanks for stopping by!

  1. Every little bit helps. I applaud the purchase as IBM is significantly cheap right now, just be careful in the future. I have not purchased IBM because I am concerned about the falling revenue but perhaps they will turn things around.

    1. Hi ADD,

      IBM is a great company and in fact, I bought it cheaper than Warren Buffet’s BRK.B :), which happens rarely. Once we look back after some time, it would do fine as it has such a big moat and at these prices, we are getting it now with a margin of safety as well.

      Thanks for your kind words and stopping by!

  2. Nice buy PIM…we also own shares in IBM. We certainly think that long-term, there is certainly room for growth here. We bought in a few months back at a higher price (in the 160s). We continue to keep our eye on the price and might consider buying more if the price dips below 150 again.

    Best wishes! AFFJ

    1. Hi AFFJ,

      Glad to be fellow shareholders in IBM. 160’s is still a price point and I’m going to drip it slowly to build up my positions in this behemoth.

      Thanks for your best wishes and stopping by!

  3. Thanks for sharing your recent buy in IBM. While I can see many reasons why people love this stock and dividend I just don’t share the enthusiasm for any tech name in my long term portfolio despite excellent past performance. I won’t say you made a bad purchase, because on the surface it’s not, I’ll just say it’s not a purchase for me or my long term portfolio.

    1. Hi DivHut,

      As I mentioned, I do not own many tech companies either, this is the first one added in any of 4 portfolios and it is a big deal. It was added after much thought and consideration over some other tech companies like AAPL, MSFT, HPQ, INTC, BABA, etc. IBM has survived over a long period of time and will survive my investment horizon.

      Agree, tech companies are not for everyone and was not for me either till now, however, I would like to diversify and have a balanced portfolio in the end.

      Thanks for stopping by!

  4. I think IBM is selling at an attractive point to add shares. I hold MSFT and HPQ in my portfolio as well. Thanks for sharing it and keep it in my watch list as well.

    1. Hi Keith,

      Glad to hear that! You like the value in IBM and I believe too that IBM is selling at an excellent price. MSFT and HPQ are great companies however, IBM is a real dark blue chip company due to its depth, breadth and multitude of service offerings 🙂

      Thanks for stopping by!

    1. Hi Nuno,

      I bought IBM close to $150 range and as of today, it is trading in $160’s, so, I guess, I bought at the right time 🙂 Its most likely due to luck, I do not consider myself as a market timer, however, better prices are icing on the cake, no doubt about that. Berkshire is buying more shares of IBM, and I consider it as bluest of the blue company. If you do not feel comfortable with it, there are many more companies. I always say that if you can sleep well in the night, its a right-sized and right-typed investment for an investor, otherwise not. Appreciate the kind wishes!

      Thanks for stopping by!

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