Low-Risk Retirement Portfolio: Top 5 Stocks

2. International Business Machines Corporation (NYSE:IBM)

Number of Hedge Fund Holders: 43

International Business Machines Corporation (NYSE:IBM) generated $810 million in free cash flow in Q2 2022 and its operating cash flow came in at $1.3 billion. The company has been paying dividends to shareholders since 1916 and has been raising its payouts consistently for the past 27 years. It pays a quarterly dividend of $1.65 per share, with a yield of 5.10%, as of August 9.

In July, Morgan Stanley raised its price target on International Business Machines Corporation (NYSE:IBM) to $157 with an Overweight rating on the shares, expecting the company to perform well in the second half of the year.

At the end of Q1 2022, 43 hedge funds in Insider Monkey’s database presented a bullish stance on International Business Machines Corporation (NYSE:IBM). These hedge funds owned stakes worth over $1.16 billion in the company.

St. James Investment Company mentioned International Business Machines Corporation (NYSE:IBM) in its Q4 2021 investor letter. Here is what the firm had to say:

“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.

One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)