IBM raises dividend and announces $15 billion leveraged buyback program

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.

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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

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