- The Finance Gourmet

Dogs of the Dow 2022

February 3, 2022January 20, 2022 by Finance Gourmet

. I first heard of the Dogs of the Dow strategy back when Motley Fool was just becoming famous, largely based on the out-sized success of their investment in AOL as the Internet Bubble continued to swell. (Whew! There’s a lot of investing history, and investing lessons in that one sentence.) The Foolish Four was a supposed improvement on the Dogs of the Dow strategy. I never invested that way, and it turns out to have been a good move. As the year rolls over to 2022, there come the obligatory articles about which stocks are the 2022 Dogs of the Dow, and whether the Dogs of the Dow is a good investment strategy. So, I thought we’d take a quick look. What Is the Dogs of the Dow Strategy? The Dogs of the Dow is an investment strategy where an investor invests in the 10 stocks in the Dow Jones Industrial Average that have the highest dividend yield as of 12/31 on the first trading day of the year in equal amounts and then holds the stocks for the full year before repeating the process. The idea (which used to be true, but is less so these days) is …

IBM Stock Spinning Off Kyndryl

October 20, 2021April 14, 2021 by Finance Gourmet

I have had a love/hate relationship with IBM for a long time. On the one hand, it’s an American staple that successfully spun off its PC business back when it could get a good deal for it. On the other hand, it insists on wasting BILLIONS of dollars on share buybacks that do nothing more than help its executives meet their targets before they ship the stock back out the front door as executive stock options. But, and this is the kicker, IBM kicks out a very sweet dividend. Even when the stock trades sideways, earning 4% in a zero-interest environment with an almost zero chance of bankruptcy, it a great investment. Check out my Stash stock back review. Now, IBM is doing another thing that I don’t really like. IBM is listening to short-term investors who don’t like steady, but non-growth income. Instead, these shareholders want stock price appreciation, even at the cost of a long-term stable business. That means the board wants price appreciation. That means the CEO only earns those millions in bonuses if the stock price goes up, even if the company prints money during the day. As a result, IBM is spinning off its managed …

Tech Earnings and Stock Market Moves

July 21, 2015 by Finance Gourmet

The U.S. stock market is composed of thousands of stocks. Of course, when it comes to moving the overall market, some stocks matter more than others. The biggest stocks, those in the S&P 500, and those in the Fortune 500, have some of the biggest impacts on the overall stock indexes. However, in most cases, the news that comes out of those companies is relatively expected. The exception to this rule are the technology companies. Unlike, say oil companies, or big manufacturing companies, it isn’t always easy to use the economic information surrounding them to accurately predict what will happen, especially when it comes to earnings reports. And, with those same companies forgoing the usual “guidance” that other companies provide, what happens in tech company earnings can be a true market moving surprise. This week saw a negative report from industry titan IBM. IBM is not only a household name technology company, but it is also the second highest weighted component in the Dow Jones Industrial Average, commonly referred to as The Dow. The company itself is down over 5 percent so far today, and the Dow is down over 1 percent, or more than 150 points. (Also dragging on …

IBM Earnings Up

January 18, 2011 by Finance Gourmet

IBM reported its 2010 third-quarter earnings today. The company reported earnings per share of $2.82 which is up 18 percent. The company did not announce any increase in the dividend paid per share, although that was not unexpected. The company continues to use share buybacks as the primary method to "return money to shareholders." The company’s third-quarter earnings announcement notes that the company, "returned $4.5 billion to shareholders through $0.8 billion in dividends and $3.7 billion of share repurchases," a ratio of approximately 1 to 46. However, the company did note that its free cash flow was down $300 million to $7.6 billion for the first nine months of the year. Coming up later today, Apple reports its earnings. The company does not pay dividends at all, preferring to build an enormous hoard of cash for some future purpose.

Are Share Buybacks Really Good For Shareholders?

October 26, 2010 by Finance Gourmet

IBM released their quarterly earnings. As is customary, the company announced various financial numbers like how much it earned per share and how much revenue it generated for the quarter, and so on. As is customary for IBM, the company also announced yet another giant share repurchase using shareholder money to buyback IBM shares of stock. The idea of a stock buyback is that the company figures that its stock is undervalued on the stock market. By buying shares of stock at those low prices, the corporation is increasing shareholder value by making a good investment in itself. Theoretically, those shares repurchased by the company at a low price can be used to pay out earned stock options, for example, at a lower cost. But, IBM — along with many other companies — has perverted the concept of a share repurchase or stock buyback. IBM Stock is currently trading near an all-time high stock price. While, it is possible that even at that price per share the company believes its shares are undervalued, that is not what is really going on here. IBM Stock Buybacks Share Repurchase Run Amok IBM is not a “new” tech company like Microsoft, Google, Amazon, …