What a long, strange trip it's been for shares of enterprise tech stalwart International Business Machines (NYSE:IBM). While IBM badly missed the dawn of the cloud-computing era, there's mounting evidence that 2017 will be the year the seeds of CEO Ginni Rometty's long-awaited turnaround finally show green shoots.

Unfortunately, the investing community seems to have already noticed that IBM was preposterously cheap, even in the depths of its multiyear business-model pivot. After bottoming out roughly a year ago, IBM stock has been on an absolute tear over the past year, rallying 38% over the past 12 months.

This leaves would-be investors in something of a quandary. Trading at a price-to-earnings ratio of 14, IBM is still cheap. It's also hard to say how much farther its shares can rally, given IBM's size and the gradual nature of its business-model evolution.

The believers in the audience can stand pat. However, for those who think the best of IBM's return to growth has already been priced in, here are two similar dividend stocks that each offer something that IBM is lacking: Anheuser-Busch InBev (NYSE:BUD) and Procter & Gamble (NYSE:PG).

Company Name

Dividend Yield

5-Year Dividend Growth Rate

Consecutive Dividend Increases

Anheuser-Busch InBev NV



7 years

Procter & Gamble



60 years

Data sources: Dividend.com, Bank of America Merrill Lynch.

Of course, this doesn't capture the overall investment thesis of either AB InBev or P&G, so let's look into each company in greater detail.

Anheuser-Busch InBev NV

Global beer giant AB InBev bests IBM as an income investment on several grounds. For starters, AB InBev's 3.8% yield stands noticeably higher than IBM's 3% dividend yield. Moreover, the dividend growth outlook at AB InBev seems far brighter than at IBM, especially as it swallows what was its largest rival, the former SABMiller, which AB InBev purchased for $109 billion last year.

Today's AB InBev traces its roots to the Brazilian brewery Brahma, which a set of ambitious Brazilian financiers purchased in 1989. Their emphasis on operational excellence and steady cost-cutting fueled a decades-long acquisition streak in which Brahma swallowed increasingly large beer conglomerates. The combined entity is now responsible for 1 of every 3 beers produced around the world. And its shareholder-friendly management should be able to wring out plenty of efficiencies to keep the company's earnings-per-share and dividend payments growing at above-average rates for years to come.

In recent years, AB InBev's sales growth has averaged about 4%, but thanks to the company's emphasis on continually innovating and streamlining its operations, profits have grown close to 14% annually. Adding SABMiller's portfolio will bolster AB InBev's exposure to Africa, the fastest-growing region for brewers today. So while its dividend-paying profile might appear similar to that of IBM on the surface, AB InBev seems like a better bet to grow its dividends far faster than Big Blue in the years to come.

An assortment of various P&G products

Image source: Procter & Gamble.

Procter & Gamble

If InBev's thesis was based on the future, then Dividend-Aristocrat-in-the-extreme Procter & Gamble earns its place in this article by virtue of its unparalleled payout history. To be sure, there is no such thing as a free lunch in the investing world. That being said, Procter & Gamble raising its dividend each year is about as close as you can come: The company has increased its annual cash payout for an astounding 60 consecutive years.

Procter & Gamble itself is nearly 200 years old, and it produces a host of consumer staples including laundry detergent, toothpaste, shampoo, diapers, and more. All told, P&G owns 22 brands that each produces more than $1 billion in annual sales, along with an additional 19 brands with yearly sales over $500 million. This gives the company unmatched economy of scale and marketing muscle, which it uses to support its brands to great effect.

In the last several years, though, P&G has been working to refresh its product portfolio, which had arguably grown somewhat bloated. It spent the last few years pruning underperforming brands and focusing on higher-growth products with greater financial opportunity. After several years of the stock trading sideways, it finally shone through when the company upgraded its full-year 2017 outlook during its most recent earnings report.

Today, the future looks brighter for Procter & Gamble stock. For income investors, the company's high yield and multigenerational commitment to growing its dividend, come rain or shine, make it, like AB InBev, a more attractive dividend stock than IBM.