This recession we now find ourselves in has become a serious cause of concern for many investors, particularly those who focus on income-generating stocks.
The idea that companies could or will cut their dividends in the recent term has spooked many dividend investors from loading up on otherwise blue-chip companies like “Big Blue” itself, International Business Machines (NYSE:IBM), which pays investors a dividend yield of approximately 6%, at the time of writing.
In times like these, I tend to focus on large blue-chip companies as top picks to wait out the economic hurricane that is upon us. This includes, in particular, those like IBM, with solid long-term growth potential as a large and mature technology player. I see most of IBM growth coming from its cloud computing division via its recent Red Hat acquisition.
This acquisition automatically made IBM the fourth largest player in cloud computing, a sector with only four major players. If there's anything the COVID-19 pandemic has taught us, it has to be the importance of cloud computing, as the global workforce continues to shift toward remote work arrangements.
That being said, I do think IBM, along with a broader stock market could see another leg downward in the months to come.
Therefore, I'd caution investors to be patient with respect to high-yielding blue chip options like IBM. Buying great companies in chunks (i.e. a quarter or half position now, and a chunk later on down the road - could be a great way to go to take advantage of a potential continued rebound, while also saving some dry powder for what could turn out to be a steeper market decline in the coming months.
Invest wisely, my friends.
