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IBM(IBM - Get Report) is enjoying a good January. Shares of the $229 billion company gapped up hard after management posted strong earnings guidance last week. That puts IBM's performance so far in 2013 to 6%, a full point ahead of the
S&P 500's impressive 5% run this month. A hike to the firm's 85-cent quarterly dividend could add some serious icing onto the cake. At the moment, IBM yields 1.67%.
IBM builds mainframes, designs software and provides IT services to corporate clients across the world. The "International" in the firm's name is more than just good marketing; the firm earns around 66 cents of every sales dollar overseas. That positioning is especially impressive given the tailwinds in international enterprise IT markets. As customers abroad look to upgrade their computer infrastructure, IBM offers the most storied name in the business.
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The firm has historically been good at identifying trends from afar. The firm unloaded its consumer PC unit to Lenovo in 2005, well before other computer companies figured out that their biggest business had become commoditized and margins were getting squeezed to zero. IBM's dug-in positioning in high barrier markets like mainframes gives it one of the few defensible moats in the IT business...
A dividend hike for IBM isn't without serious precedent. Last year, IBM returned $16.07 billion to investors in the form of dividends and buybacks, forking over more than 7.2% of the firm's current market capitalization. With a rally underway in stocks, dividend payouts are going to start looking like a more attractive way to return value to owners in 2013.