IBM Is Set to Join Exclusive Group of Dividend Aristocrats

(Bloomberg) -- Here’s some good news for beleaguered International Business Machines Corp. investors: it’s about to become an aristocrat.

Dividend forecasts compiled by Bloomberg show that the technology giant is poised to join the list of so-called Dividend Aristocrats, companies that have increased their dividend in 25 consecutive years, in 2020. The ascendancy to dividend royalty comes amid a five-year slide in IBM’s stock price that has seen it pare 26% of its value.

Getting added to the elite list will force funds that track Dividend Aristocrats, such as the ProShares S&P 500 Dividend Aristocrats exchange traded fund, to purchase shares of the Armonk, New York-based company.

IBM would join Automatic Data Processing Inc. as only the second information technology firm on the 57 company list. The addition would boost the weight of the information technology sector in the group to match that of energy companies.

Dividend Update

Looking beyond the aristocrats, energy firms were the biggest contributors to dividend growth in the second quarter of 2019, according to Bloomberg specialists. Cabot Oil & Gas Corp., Diamondback Energy Inc., Kinder Morgan Inc. and EOG Resources Inc. had quarter over quarter dividend increases greater than 25% contributing to the sector’s 6% quarter over quarter growth.

Key Insights

• Bloomberg doesn’t projects any sector to out gain its third quarter 2017 or 2018 quarterly dividend growth
• Financials are expected to see the pace of growth drop to 5.5% from 12.4% in 3Q 2018.
• Among aristocrats, Bloomberg’s projected 12 month dividend yield is expected to reach 6.02% for AbbVie Inc. and 6.16% at AT&T Inc.
• The projected dividend yield on the KBW Bank Index surpassed the yield on the Dow Jones Utility Average a week ago for the first time since February 2009, according to data compiled by Bloomberg
• 13 of the 24 companies in KBW’s index are expected to raise dividends or say they will consider doing so after the latest Federal Reserve stress tests

--With assistance from Jessica Beatus, Christopher Rung and Zhuo Zhang.

To contact the reporter on this story: Alex Tanzi in Washington at atanzi@bloomberg.net

To contact the editors responsible for this story: Alex Tanzi at atanzi@bloomberg.net, Brandon Kochkodin

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