Not many tech companies have such a long and interesting history as IBM. They have led the way of computers to make it real for everyone to have a computer at home. IBM is undertaking a deep restructuring at the moment, trying to adapt to the times since other companies like Apple and Microsoft have taken over the leadership in the tech industry.
The history of computers wouldn’t be the same without IBM pushing changes and innovations. However, today’s company presence is not nearly as strong as it used to be. The popularity of the internet, plus the appearance of other technologies, left IBM behind.
What is the company doing today to recover at least part of its lost potential? Is it a good idea to invest in IBM stock? And if so, how to do it?
We are going to answer all these questions and more in the guide below.
How to buy IBM stock step by step
In order to buy IBM shares, you need a broker. And not just any broker. You need one that matches your trading style and adapts to your level of expertise.
Finding the perfect broker for you is a very important decision and will have an impact on your chances to make a profit. Your broker will also offer you the research and educational tools necessary to make more informed deals and grow as traders.
So, how do you choose a broker among the many available?
There are a few aspects to consider when choosing a broker. First of all, traders need to make sure their broker is regulated. This means that their information and money are safe since the broker follows standards to guarantee that.
Other aspects to consider include costs, which tend to be a priority for many investors. And while it’s true that higher commissions and fees may have an impact on your net income, the importance traders give to costs may be balanced with other aspects as well.
You may not be willing to sacrifice certain platform features or you know you’ll need reliable customer service. Traders should also keep in mind that the more they invest, or the higher the type of account they open, the lower the fees and commission will be.
The following considerations, research, and educational tools are of importance to traders who want to learn, grow, and eventually make more profitable trades. The only way to achieve success as a trader is to keep up with what’s going on in the market, learning the ins and outs in order to make sure you can recognize advantageous entry and exit points. And your broker can help you with this.
For some traders aspects like the type of online platform, the reliability of the customer service, or maybe the initial deposit the broker asks for, or the options to transfer and withdraw money, or even their customer appreciation, may weigh when choosing one broker over another one. Traders should have very clear priorities and know what their goals are in the market.
So, now you have chosen a broker. It’s time to open an account. This is usually a simple process, similar to opening a bank account. The verification process can take from a few hours to a couple of days.
The next step is to deposit the money that you want to start investing and decide how many shares you want to buy. Before becoming the owner of IBM shares, traders need to think of how investing in this company fits in the portfolio, considering the industry as well as their available capital. It is said that ideally, no more than 10% of your total investing capital should go to one single company. This has the goal of helping traders control risk and avoiding them losing all their capital in one go.
Owning IBM shares may have some perks and advantages. For example, for traders that own a certain amount of shares, there are dividends paid quarterly, which is an interesting way of making some passive income, as well as the chance of voting in shareholder’s general meetings. Are you interested in these extras? This may affect your decision on how many shares to buy.
There are two options when it comes to buying stock. You can buy the shares at the current market price, paying the full amount and having the position executed immediately, or you can place a limit order, which means that once the price reaches or drops to what you set up, then the order is executed. Either way may work well depending on your strategy.
Pros and Cons of buying IBM stock
Decided to become an IBM shares owner? Here are some advantages and drawbacks to keep in mind.
Advantages of owning IBM stock
IBM stock is expected to perform well in the case of recession. It’s part of the cycle of the market, and while it may be in an upswing movement right now, it will happen again. And IBM has proven to be able to withstand the worst of times, as it was seen in 2001 and 2008.
The company is also investing in newer areas, like cloud computing and data analytics, under what they call strategic imperatives. Traders want to keep an eye on this segment of the company since the revenue it is bringing in could be the card that changes the future of IBM. The company reports show that the income from strategic imperatives makes up 45% of the total companies’ revenue, with an increment of 10% per year, which can only be expected to continue to grow.
Finally, IBM offers a very balanced investment with good scores in all areas. Unlike some hot stocks whose prices may rise uncontrollably (and fall as well), IBM is a safer option for traders looking into a long-term plan. What is more, IBM offers dividends, which are an interesting option for those looking to make a passive income. And the company yields a quite high percentage right now, almost reaching 4%.
Drawbacks of owning IBM stock
IBM stock may be what some experts call a value trap. Yes, the shares are cheap, but this is not because of a bearish market or mispriced, in fact, IBM stock may have a low cost because of what’s going on with the company, and it doesn’t sound good.
IBM has reported 22 quarters straight of less revenue, implying the company is stagnant and not growing, which may be a reason to worry investors.
Learning more about the company may be the way to go for investors to make sure it aligns with their principles and beliefs, but that it also shows signs of a brighter future that will make buying IBM stock worth it.
Overview of the company
IBM is a well-known American technology company that focuses on providing services in the computer industry. IBM was founded in 1911 in New York, however was only later named “International Business Machines”. IBM is based in New York and has operations in more than 170 countries.
This company can be found in the NYSE (New York Stock Exchange) under the ticker IBM.
Final thoughts on buying IBM stock
Is this a good time to buy IBM stock? There are clear advantages to owning IBM stock, like their dividends scheme that has been increasing steadily for almost 25 years.
The company also has a cash flow that ensures the dividends will continue to be paid, therefore making it a profitable investment if this is what attracts you.
However, the company has fallen behind showing a reduction in their revenue for a long time now. Traders should keep this in mind and analyze the company performance and plans and innovations to come, in order to be sure they can make informed predictions. Is IBM going to come out of their downswing strike? Hopefully so.