Dobermans of the Dow: 10 Stocks to Consider

7. International Business Machines Corporation (NYSE:IBM)

Free Cash Flow Yield: 0.05

Number of Hedge Fund Holders: 60

International Business Machines Corporation (NYSE:IBM) is an American multinational tech company that provides a wide range of related services and products to its consumers. Chinese AI firm DeepSeek recently made waves with the launch of a budget-friendly AI model. However, this disruption could work in IBM’s favor. Unlike general-purpose AI, the company’s models are designed for specific applications and come at a relatively low cost. The company’s strategy revolves around helping clients integrate AI to address practical challenges. If DeepSeek’s innovation leads to a broader shift toward more affordable and accessible AI solutions, IBM stands to gain from the trend.

Commonly known as Big Blue, International Business Machines Corporation (NYSE:IBM) has outperformed the market in the past 12 months, surging by nearly 34%, as of the close of March 10. In the fourth quarter of 2024, the company reported revenue of $17.6 billion, reflecting a 1% increase compared to the same quarter last year. The Software segment experienced double-digit growth, fueled by strong demand for Red Hat. Businesses worldwide are increasingly relying on IBM for AI-driven transformation, with its generative AI division generating over $5 billion in revenue—nearly $2 billion more than the previous quarter.

International Business Machines Corporation (NYSE:IBM) demonstrated solid cash performance in 2024, generating $13.4 billion in operating cash flow and $12.7 billion in free cash flow. In the fourth quarter, the company returned $1.5 billion to shareholders through dividend payments. Its quarterly dividend comes in at $1.67 per share and has a dividend yield of 2.60%, as of March 10. It is among the Dobermans of the Dow as the company has been rewarding shareholders with 29 consecutive years of dividend growth.