That can’t be right, can it?

I just read that the Nasdaq is only down 1% for the year. It sure feels like that decline would be larger. But indeed, the tech-heavy market barometer currently sits at 8,870 as I write this, within shouting distance of where it closed out 2019 at 8,972.

That means the Nasdaq is only one good day away from being in positive territory in 2020. Pretty remarkable under the circumstances. From the February peak of 9,800 to the March trough of 6,800, the index lost roughly 3,000 points in one month. Thirty days later, it has recouped about 2,000 of those, rebounding 27%.

That’s not terribly surprising. The tech sector was in charge before the correction, and market leaders going into a downturn are usually among the quickest to recover afterward. Looks like that pattern is playing out once again.

Just look at Crown Castle (NYSE: CCI), for example. It’s roared 40% since the market bottomed a month ago and is now solidly in the green year-to-date.

How You Should View The Market Right Now

Back in March, I compared the extreme market pullback to a rubber band that had been stretched too far. Since then, it has sprung back in a big way. It’s no coincidence that the inflection point — when sellers turned into buyers — coincides with the passage of the $2 trillion stimulus package.

There is still considerable uncertainty, even with many states sustaining a 14-day downtrend in new Covid-19 cases and unveiling plans to re-open. That’s an important step, but a return to pre-crash economic (and earnings) levels won’t happen overnight.

That’s why I remain a bit cautious. I argued that the selloff was overdone, but the same may be true of this rally. Nevertheless, I will continue to selectively put cash to work on a case-by-case basis. The pool of high-quality 4% to 6% dividend yields that was running dry a few months ago has suddenly been refilled by this torrential storm.

And I intend to drink my fill.

Take IBM (NYSE: IBM) for example. Anybody can raise dividends when the economy is soaring. The real test of a company’s mettle is how it responds to a recession.

Sadly, many S&P firms have been forced to slash (or suspend) their payouts to preserve cash during this slowdown. General Motors (NYSE: GM) is the most recent, following oil services provider Schlumberger (NYSE: SLB), casino operator Las Vegas Sands (NYSE: LVS), and a host of others.

But IBM isn’t among them. Big Blue just raised its quarterly distribution from $1.62 to $1.63 per share. That’s a modest increase, but any hike at all is appreciated in this tough climate. And with it, the company has just reached a key milestone: 25 straight years of rising dividends.

That means IBM is the newest member of the exclusive Dividend Aristocrats club. At current prices, the stock offers a yield north of 5%.

Action to Take

IBM generated $4.5 billion in cash flow last quarter and $15 billion over the last 12 months. After capital expenditures, free cash flows are running at $12 billion annually or nearly $1 billion per month.

Management is doing a fine balancing act, returning some of that cash to stockholders, reinvesting in new growth platforms, and paying down debt incurred with the acquisition of Red Hat. That merger helped propel the firm’s cloud-related revenue to $5.4 billion last quarter, a healthy 23% increase.

The point is, stocks like IBM are exactly what you want to own right now. While growth in other divisions remains elusive, the company’s massive cash flows continue to impress. It’s no reason then that the stock has rebounded 35% from its March lows.

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