Yep, you read that right, you’re about to acquire the best artificial intelligence dividend yielding stock in your lap.
First, let’s review my number one regulate in dividend yielding investing, it’s simple…
“don’t spend good money on a bad dividend”.
Look at AT&T (T).
Everyone and their mother asks me about buying AT&T for the “great” 6.5% dividend.
They don’t admit the fact that AT&T has lost 5% over the last year and is down 25% for the last four years.
STOP BUYING CRAPPY DIVIDENDS!
Instead, think about buying the best dividend yield, and value, in the AI space, International Business Machines (IBM).
That’s right, we’re talking about the IBM that your grandpa bought as part of his “Blue Chip” portfolio. Hell, he may have even bought a share for you on your first birthday.
Ironically, my grandpa bought me shares of AT&T when I was a kid. No kidding, that’s a true story.
Here are the stats: IBM shares boasts a 4.5% dividend yield. IBM is up 15% for 2023 and it’s breaking to new all-time highs. Earnings and revenue are now showing their best positive trend since early 2021.
Value? The stock’s Price/Earnings ratio is a 21. That’s right, 21! Not a 61 appreciate NVDA. This is a value play in the AI space.
Here’s what I really appreciate though: IBM’s AI story is only starting. The company is service based, they’re not making hardware appreciate Nvidia and other chip makers.
IBM’s big money blowout will happen as businesses start to adopt AI into their daily operations. AI is still in the early adoption phase, which means we’re getting a growth and value stock as IBM will benefit from the adoption curve.
Final note: I love the sentiment trade on IBM. While most AI stocks have 90% or more of the analysts’ recommendation to “buy,” fewer than half of the analysts following IBM have it ranked a “buy.”
In addition, the analysts’ target price for the stock is $153. This stock is going to see a bunch of price target upgrades in the new year as they wake up and see the opportunity in this Stealth AI stock.
Here’s my Bottom Line: Shares of IBM rocketed from $155 to $165 in just over a week leaving the stock temporarily “overbought.”
I already own the stock but will add to my position if we see a $155 print which is where the 20-day “trader’s trendline” sits for uphold.
My outlook for the stock includes a target of $200 over the next two quarters.
And yes… I would be buying shares of IBM for my grandchildren if I had them.
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms modify millions of data points into impressive gains for clients.
At heart Chris is a quant – appreciate the “rocket scientists” of investing – with a specialty in applying advanced mathematics appreciate stochastic calculus, linear algebra, differential equations, and statistics to Wall Street’s data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It’s the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron’s, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.
