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IBM Stock Rises on 10% Dividend Boost

IBM shares creep up after the company raises its dividend 10% to 55 cents.

Updated from 12:18 a.m. EDT



shares crept up in Tuesday trading after the tech bellwether announced plans to boost its quarterly dividend and launch a $3 billion stock repurchase program.

The company raised its quarterly dividend from 50 cents to 55 cents a share, marking the 14th year in a row that IBM has increased its dividend.

Not surprisingly, investors responded positively to the news, and IBM's stock rose $2.43, or 2.43%, to $102.38, outpacing a modest advance in tech stocks that saw the Nasdaq climb 0.14%.


We view the unexpected dividend increase as a modest positive, especially in light of the current macro backdrop," wrote Maynard Um, an analyst at UBS, in a note released Tuesday. Um maintained his "neutral" rating and $100 IBM price target.

IBM's board also authorized $3 billion in additional funds for its stock repurchase program Tuesday, and now has approximately $6.7 billion with which to buy back stock.

"We were not surprised to see the additional repurchase authorization," wrote Maynard. "IBM only had ~$3.7billion remaining under its current authorization and expected share repurchases to likely accelerate."

The analyst nonetheless warned that the tech leviathan is still vulnerable to the


of an unforgiving economy. IBM could capitalize on its strength in areas such as public sector, , he explained, but still suffer from limited improvements in the short-term macro environment.

IBM recently


analysts' first-quarter revenue estimates but repeated its bullish commitment to 2009 earnings of $9.20.

The Armonk, N.Y.-based firm, which was recently in discussions to


troubled tech giant

Sun Microsystems


, is also confronted with a rapidly shifting competitive landscape. Sun was eventually snapped up by IBM's database rival



and even networking giant



is stepping on Big Blue's toes with its recent entry into the server market.

Storage behemoth



became the latest company to flex its muscles when it launched its high-end


system, a direct competitor to IBM's Enterprise Storage Server.

IBM, however, is already corralling its wagons, notably by


its distribution deal with



for Internet switches and routers.