IBM (NYSE: IBM) announced plans to increase its current buyback program by $15 billion. The $15 billion program is in addition to $1.4 billion from a previous authorization. The company plans to borrow a large portion of the funds to complete the repurchase. Also, the company will raise the quarterly dividend from $.30 to $.40 beginning with the June distribution.
PAYOUT YIELD ANALYSIS
With approximately 1.48 billion shares outstanding and assuming that the company completes at least half of the program in 12 months, the repurchase yields $5.54 per share. If the entire program were completed in 12 months, the repurchase yield would be as high as $11.08 per share.
The annualized dividend of $1.60 plus the $5.54 per share from the repurchase program results in a projected Total Payout of $7.14. At a stock price of $100, the projected Total Payout Yield is 7.14% with the potential to reach 12.7%.
- Payout Yield Staff