IBM increases its dividend 18%

Big Blue also authorizes spending an additional $8 billion to buy back shares. But the stock drops in the sell-off.

By Charley Blaine Apr 27, 2010 1:10PM

Updated at 6:32 p.m. ET

 

Amid all the gloom of the day, IBM (IBM) had some decent news for investors: Big Blue increased its dividend by 18.2% to 65 cents a share.

The company also said its board authorized the company to spend another $8 billion on share repurchases, on top of $2 billion remaining from its previous authorization. Last year the company spent about $7.5 billion buying back its own stock.

With the new stock buyback plan, IBM will have about $10 billion at its disposal to repurchase stock.

The technology giant expects to request another share buyback authorization in October.

The decision came before the company's annual meeting in Milwaukee. And it reflects the company's solid financial position.

On April 19, Big Blue reported a 16% increase in first-quarter earnings per share and a 13% increase in net income. IBM

Revenue of $22.9 billion was up 5%, although flat once the effects of a falling dollar were removed.

Free cash flow -- what's left after capital expenditures -- was up $400 million to $1.4 billion.

The decision initially won investor cheers; the stock was up as much as 1% to $132 soon after the announcement was made. But the big sell-off knocked IBM's shares down to $128.82, down 1.5%.

IBM shares are off 0.8% so far this year. In 2009, IBM was the third-best performer among the 30 stocks in the Dow Jones Industrial Average ($INDU).
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