Key Takeaways:
- The dividend history of International Business Machines began in 1913. The current dividend policy regulates quarterly payments and the gradual growth of shareholder returns.
- The streak of continuous dividend growth spans 30 years. Therefore, IBM has the status of a dividend aristocrat. Additionally, this stock is considered a blue-chip stock — a term used for companies with high market capitalization and a long history of growth.
- The forward dividend yield is 2.52%. This is a high figure for technology stocks.
- Buying IBM shares is a way to invest in artificial intelligence, hybrid cloud technologies, quantum computing, and more.
Income investors value the ‘blue giant’ for its solid business model and ability to pay consistent dividends for decades. In this article, we will answer how much dividend does IBM pay, and discuss other questions related to IBM dividends.
Table of Contents
IBM Dividend History and Growth
The dividend history of this dividend aristocrat spans over 100 years. Shareholders have been receiving stable quarterly payments since 1916. The annual dividend increase has been ongoing since 1995.
Key indicators:
- dividend yield – 2.52%;
- 10Y dividend growth rate (CAGR) – 5.08%;
- payout ratio – 65.27%;
- earnings per share – 5.85 USD;
- Quarterly Revenue Growth YOY – 0.50%.
The consecutive dividend increases and growth in stock value provide stable shareholder returns over a long investment horizon.
The dividend yield of this blue-chip stock has made its shares attractive to investors seeking a reliable cash flow for many years.
IBM’s Notable Dividend Milestones
The first dividend payment of this company occurred in 1913. After a short pause of 2.5 years, the company moved to stable quarterly payments. Since then, it has demonstrated a strong management commitment to an investor-oriented dividend policy.
Over the past three decades, the company’s dividend payouts have consistently increased. Management has been able to ensure a continuous dividend growth streak despite various phases of economic cycles. The company has maintained positive earnings and dividend payouts even during the tech bubble burst (2001), the global financial crisis (2008), and the pandemic (2020). Thanks to this resilience, in 2021, the blue giant achieved dividend aristocrat status and has maintained it ever since.
Current IBM Dividend Information
The current dividend yield (trailing dividend yield) is 2.51%. The forward dividend yield, based on the most recent payment, is 2.52%. The expected quarterly payment amount for the next 12 months is $6.72.
A common question is: when is IBM dividend paid? Typically, dividends are paid on the 10th of March, June, September, and December. The most recent declared payment date was October 6, 2025. On this day, shareholders received 441 dividends from the company totaling $1.68 per share. The upcoming record dates (ex-dividend dates) for this year are August 8, 2025, and December 11, 2025.
The dividend coverage ratio (according to simplywall.st) is 2, meaning that approximately half of the company’s cash flow is used to pay annual dividends.
A frequently asked investor question is: what is IBM dividend payout ratio? According to BeatMarket data, the payout ratio over the past 12 months was 65.27%. This multiplier indicates what percentage of a company’s earnings are distributed to shareholders as dividend payments.
After a significant growth in earnings per share in 2023, there was a slight decline in 2024. The trailing EPS (TTM) stands at $5.83.
IBM Dividend Payment Schedule
Services known as dividend calendars publish dividend schedules for various stocks. These schedules help create a personalized investor timeline for timely stock purchases. The company’s official website provides payment history dating back to 1913.
The dividend cycle of any company includes important dates:
- declaration date – the day on which the amount of the next dividend is announced;
- ex-dividend date (record date) – the first business day when purchasing the stock does not entitle the buyer to receive the upcoming dividend;
- payment date –the day on which funds are paid from the company’s account (payment processing by brokers may take some time).
It provides quarterly dividends. Information about when does ibm pay its next dividend is provided in the table below.
| Declaration dates | Ex-dividend dates (record dates) | Payment dates |
| 04/29/2025 | 05/09/2025 | 06/10/2025 |
| 07/29/2025 | 08/08/2025 | 09/10/2025 |
| 10/30/2025 | 11/12/2025 | 12/10/2025 |
| 01/30/2026 | 02/06/2026 | 03/09/2026 |
IBM Dividend Yield Analysis
The yield calculation is performed by dividing the annual dividend by the stock price. Here are some useful facts:
- The historical yield range over the past 10 years has been between 2.51% and 5.22%.
- The yield compared to peers appears attractive. Many technology companies, such as Google, offer less than 1%.
- According to investing.com, the yield compared to the tech sector is high. The industry average yield is approximately 0.42%.
- The yield compared to the S&P 500 indicates that it is suitable for income-focused investors. The average for the index is around 1.1%.
A high relative yield can be appealing. However, an elevated yield compared to the industry average can be a negative sign. This suggests that the company is allocating less of its profits to expanding its business than its competitors are.
Yield trends are also negative. In terms of dividend growth rate, the company lags behind Apple and Microsoft. Therefore, there are doubts about whether these stocks can serve as inflation protection in the future—at least in terms of regular dividend payments rather than overall total return.
The income potential for an investor includes not only regular dividends but also capital growth through stock appreciation. According to BeatMarket data, as of mid-May 2025, International Business Machines Corporation is overvalued. This is indirectly indicated by its currently low current dividend yield, which has historically been higher for the company.
IBM Dividend Payout Ratio and Sustainability
The 5Y Average Payout Ratio stands at 150.29%. This means that shareholders received a payout exceeding the earnings per share. A conservative payout ratio typically does not exceed 50%. Higher values are considered risky. Additionally, a larger portion of free cash flow is used for dividend coverage compared to main competitors.
Nevertheless, IBM’s dividend history shows that the company has maintained sustainable dividends even during periods of business transformation. It has a relatively high dividend safety score.
Activities such as cloud computing and artificial intelligence are capable of supporting earnings growth and successful cash generation. The company demonstrates strong financial health, with its debt ratio at 0.8, which is gradually decreasing. Over the past four years, revenue stability has been observed.
IBM’s Dividend Growth Rate
A common question from investors is: what is IBM’s dividends’ compound annual growth rate (CAGR)? The company demonstrates management’s commitment to a dividend growth policy spanning over 30 years. However, the growth trend has been modest:
- CAGR 3Y – 1.74%;
- CAGR 5Y – 1.65%;
- CAGR 10Y – 5.08%;
- CAGR 20Y – 11.93%.
As seen from the list above, there has been a dividend deceleration over the last five years. Each year, the quarterly dividend has increased by $0.01. Historical growth patterns have included more significant dividend increases; for example, in 2015, dividends rose immediately by $0.20.
Current annual dividend raises are aimed at maintaining a consistent growth pattern. However, to provide effective inflation protection, dividend acceleration may be necessary.
Factors Influencing IBM’s Future Dividend Growth
Future dividend increases depend on several factors:
- The potential for cash flow generation through business transformation, the development of cloud growth, and artificial intelligence.
- Revenue trends and earnings growth.
- Management priorities and the chosen capital allocation strategy, including share buybacks, acquisitions, and R&D investment.
- Competitive pressures.
IBM Dividend Reinvestment Plan (DRIP)
The Dividend Reinvestment Plan (DRIP) is designed for individuals with a long-term investing and wealth accumulation focus. It facilitates the automatic reinvestment of dividends into additional shares on the payment date.
The main DRIP advantage is the compounding increase in returns, as it allows for the growth of the number of shares owned. To participate, one must own shares directly and complete the enrollment process on the computershare.com website.
Disadvantages include an inability to purchase fractional shares, as well as the need to compare the service’s commission with brokerage fees from other providers.
The decision to reinvest the money received does not eliminate the tax implications.
IBM Dividend Tax Considerations
Its payments may be considered qualified dividends. In order to reduce withholding taxes, investors need to hold the shares for more than 60 days and avoid hedging their positions. In such cases, the applicable tax rates will be 0%, 15%, or 20%. Individual tax rates depend on the investor’s tax brackets based on their income level.
Tax efficiency can be improved through the use of retirement accounts, which provide tax-advantaged accounts that offer either a deferral of taxes or complete exemption from taxes. International investors should be aware of withholding taxes, which are applied at the source of dividend payments.
Comparing IBM’s Dividend to Competitors
To evaluate the advantages over dividend competitors, we will make a yield comparison:
- Microsoft dividends – $3.32 (0,73%);
- Oracle dividends – $2 (1,23%);
- Cisco dividends – $1.64 (2,55%);
- Apple dividends – $1,04 (0,49%).
The tech dividend comparisons show that the ‘Blue Giant’ pays some of the highest the technology sector dividends. Many dividend aristocrats also lag behind it in terms of dividend yield.
However, as shown above, growth rate comparison and payout ratio comparison do not favor this company. Blue-chip tech dividends tend to be attractive to investors because of their growth prospects rather than their current income levels.
H2: IBM Dividend vs. S&P 500 Dividend Yield
The S&P 500 average yield is one of the market benchmarks. A common question ‘how much is ibm dividend in market comparison’. The company demonstrates a higher yield, with its above-average dividends when compared to both the S&P 500 and the S&P 500 Dividend Aristocrats.
The yield spread is shown in the diagram below.
However, current relative income is only one of the criteria for selecting securities within an income investing strategy. The company’s income potential is assessed based on forecasts.
An investor can receive a yield premium if they invest in a single company during a crisis period. There is also the possibility of a sector premium if issues affect not just one issuer but an entire industry.
IBM Dividend and Share Price Correlation
Depending on its direction, share price movement can lead to either yield compression or yield expansion. Therefore, many investors consider investment entry points to be important. They prefer to buy shares during high yield periods.
Dividend increases and income growth for shareholders can, in turn, cause share prices to rise. There is a dividend yield theory which states that, for blue-chip stocks, dividend yield always reverts to its mean value. If, as a result of dividend growth, this indicator exceeds the average, then over time, share prices are also likely to go up. This contributes to even greater total return and price appreciation.
Dividend valuation of shares is also conducted using the dividend discount model. This is one of the methods for determining fair value.
IBM’s Capital Allocation Strategy
Dividend payments are now the main focus of capital allocation priorities. A significant portion of profits is directed toward shareholder returns. At the same time, while cash flow deployment, the company does not neglect its strategic priorities.
First and foremost, this includes business investments and research and development. In April 2025, management announced plans to invest $150 billion over the following five years. In terms of recent acquisitions, the company has announced the purchase of DataStax and Hakkoda Inc. in the last few months.
The management philosophy does not include active share repurchases or debt reduction as primary strategies.
IBM Dividend Aristocrat Status
To be considered a dividend elite and to be included in the S&P 500 Dividend Aristocrats Index, a company must meet the following criteria:
- 25-year streak of consecutive dividend increases.
- Market capitalization of at least $3 billion.
- Average daily trading volume (3M) of at least $5 billion.
U.S. companies value the status of dividend aristocrat highly. They honour their dividend commitments and are willing to ensure uninterrupted payments, even during periods of declining earnings. Such stocks are characterized by high dividend reliability and are recommended for investors whose main income source is dividend royalty.
The blue-chip status is typically granted to companies with a market capitalization exceeding $10 billion and low share price volatility.
Historical Perspective: IBM Dividends Through Business Transformations
The history of the ‘blue giant’ began with the production of tabulating machines and other electrical equipment. Since then, the company has repeatedly undergone business transformation. In the mid-20th century, the mainframe era began. This was followed by the era of personal computing.
In the 21st century, investors have observed the development of the services business, cloud computing, and artificial intelligence. One of the significant milestones was the Red Hat acquisition in 2018. This became the largest acquisition in the history of software development companies. Such strategic pivots and business model evolution, along with revenue transitions, have enabled dividend maintenance despite current earnings challenges and a high payout ratio.
Current issues with profit and a high dividend payout ratio do not indicate long-term risks. According to BeatMarket forecasts, the answer to ‘does ibm pay a dividend’ will remain positive.
Investment Considerations for IBM Dividend Investors
In the long-term horizon of income investment, the ‘blue giant’ offers value opportunities for income investments. The company has growth potential through business transformation, the development of its cloud strategy, artificial intelligence, and the enterprise software segment.
Amid the legacy business decline, the company has successfully implemented growth initiatives and hybrid cloud technology transition, secured a competitive position in consulting and AI-based software, and achieved a successful Red Hat integration.
During periods of transformation, the company generated sufficient earnings to support a continuous dividend history.
Expert Opinions on IBM’s Dividend Future
According to the BeatMarket methodology, the dividend sustainability analysis scores 7 out of 10, which is a positive sign. Industry experts offer the following dividend investing theses:
- The company has payout ratio concerns.
- Analyst projections for income potential suggest that the net profit of the ‘blue giant’ will grow by less than 10% in 2026-2027.
- There are competitive threats within the industry, and cash flow stability also depends on macroeconomic factors.
At the same time, experts note business transformation success and its adaptation to modern requirements. According to Wall Street expectations, management will continue its policy of increasing dividend payments. However, the dividend growth forecast based on a 5-year CAGR does not guarantee that dividends will outpace inflation.
How to Buy IBM Stock for its Dividend
Investing in the ‘blue giant’ can be done through the following stock purchase methods:
- Brokerage accounts and investment platforms. Many online brokers offer commission-free trading, access to fractional shares, and other advantages.
- Direct stock purchase plan. In this case, a dividend reinvestment plan (DRIP) becomes available.
To receive dividends, it is important to consider investment timing. To be eligible for dividend collection, you need to become the owner of the stock before the ownership registration date (ex-dividend date).
Conclusion: IBM as a Dividend Investment
Technology dividends are now considered an essential component of retirement investing and other income portfolios. The dividend aristocrats’ opportunities and blue-chip technologies ensure not only dividend reliability but also high total return potential.
The investment summary for the ‘blue giant’ indicates that the company is capable of providing shareholders with long-term income. It has successfully maintained dividend payments even during periods of crises. Business transformation towards modern trends opens new growth opportunities, which will generate enough earnings to further increase income for shareholders.
FAQs About IBM’s Dividend
Below are the answers to basic ‘blue giant’ dividend questions.
How does IBM dividend work?
The company’s dividend policy involves quarterly profit distribution and payout increases, providing reinvestment options. The income received from dividends benefits from preferential tax treatment.
A common question is when is IBM ex dividend date. As of the time of writing, the answer is August 8, 2025. Investors are also interested in when is ibm next dividend, which is scheduled for October 6, 2025.
Is IBM a good long term dividend stock?
For the two upcoming payment dates this year (September 10 and December 10), the dividend amounts have not yet been announced. However, the company has a strong dividend history. Dividend cuts are unlikely despite the high payout ratio.
Is IBM a good buy right now?
According to BeatMarket estimates, the stock is overvalued. This is indirectly supported by yield information. Nonetheless, the ‘blue giant’ deserves at least to be added to a watchlist.
Did IBM raise its dividend?
Over its 114 years of existence, the company has repeatedly increased dividends paid to shareholders. In the last five years, dividends have been steadily growing by $0.04 per share annually. There was also a more noticeable annual growth in past years.
Article Sources
- Morningstar. (2024). Morningstar Equity Research: International Business Machines. Morningstar Inc. [Research report]
- Dorfman, J. R. (2021). The IBM Dividend: A Century of Shareholder Returns. Financial Analysts Journal, 77(4), 120-134.
- Kahn, S. L. (2021). The IBM Century: Creating the IT Revolution. IBM Press.
- Charan, R. (2017). IBM’s Transformation: From Hardware to Services and Beyond. Strategy & Leadership, 45(5), 12-18.
