Ouch! :-o
https://seekingalpha.com/article/4466347-ibm-dead-dinosaurs-cant-dance
"Revealing a Rotten Core
In total, this paints a damning picture. IBM has been keeping the stock "alive" and somewhat propped up with buybacks, but even that hasn't worked as I've clearly shown in some simple charts above.
What's worse, is that I've also shown how the "juicy dividend" has lulled investors into complacency, and even living off of the hope of a brighter future. But, the dividend growth is slowing down. It's clear as day. And, it's getting worse, as you can see with the relentless growth in IBM's payout ratio.
Quick Sidebar on Kyndryl
This article is about IBM. The idea is simple. Revenue isn't growing. And, we see that any money being made is just pouring into buybacks and the dividend, all the while, the core business is stagnating and dying. Financial engineering is being used to attract and "stick" income investors who are at a growing risk. Just look at the financial engineering and the payout ratio.
Adding it all up, this is a company without any soul. There's no true innovation. No spark. No real emotion, or energy, or anything that's truly compelling to me. It all feels like a stillborn baby dinosaur.
Wrap Up
I'm bearish on IBM. I've been entirely disappointed with the business for years. I've given them plenty of time to turn things around but leadership hasn't turned things around.
As I've clearly indicated, revenues continue to decline. Earnings per share also keeps going down. At the same time, buybacks are burning cash while hardly providing any real support or improvement in the stock price. Lord only knows what the stock would look like without that financial engineering.
Furthermore, while the dividend is juicy, dividend growth is slowing down. Sure, the dividend is "high" and that yield keeps moving upwards. But, that's largely because of two factors.
+ First, the stock price keeps dropping, so that obviously pushes up the yield. It means a capital loss over time, while dividends go up.
+ Second, the yield is getting a bit top heavy, given the payout ratio. So, while revenue is going down, IBM is pushing a larger and larger fraction into dividends.
Finally, I'm not enchanted with KD. It looks like a baby dinosaur that is already on the way down and out. And, it's not just me. The market doesn't like this weak spinoff either. The horrific price action clearly shows that investors aren't fooled. It's not stable yet. Who knows when it'll reach bottom.
To be absolutely clear, I'm not recommending any kind of shorting. However, these two companies are not worth holding for the long term. Adding it all up, IBM is a sell and KD is a sell. "