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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

10 Best Dow Dividend Stocks for 2011

10. IBM (IBM) makes technology products and offers consulting services worldwide.

12-Month Sales Growth: 2.7%
12-Month Net Income Growth: 10%
Quarterly Operating Profit Margin: 19%
Cash Flow Multiple: 9.5 (41% peer discount)
Analysts' Median Target: $152.50
3-Year Dividend Growth: 19%
Dividend Yield: 1.8%
Payout Ratio: 23%

2011 Catalyst: Despite mediocre growth, with third-quarter sales up 3% and net income up 12%, IBM's stock has risen 10% in 2010. Its float has decreased 5.5% since the year-ago quarter. Quarterly earnings per share jumped 18%, boosted by the lower share count. Furthermore, return on equity was exceptionally high, at 65%, exceeding the industry average of 51% and the S&P 500 average of 13%. Such outstanding metrics have helped the stock deliver annualized gains of 9.9% since 2007, outperforming indices.

A foray into cloud computing will help bolster growth in the coming year. IBM has purchased 14 competitors in 2010. Three more deals are pending. Cloud-computing company Salesforce.com has seen its shares more than triple this year. Cloud is the tech theme of 2011.

Bullish Scenario: Citigroup predicts that IBM's stock will appreciate 10% to $160.

Bearish Scenario: Gleacher & Co. offers a target of $137, implying 5% downside.

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