Does IBM Pay Dividends? Over 100 Years of Consistent Payments

Does IBM Pay Dividends?

Yes, IBM (IBM) pays dividends. IBM offers a healthy dividend of $1.67 per share, with the last dividend paid on June 10, 2024.

IBM is one of the most recognized tech companies in the world. It offers a wide range of products and services, including artificial intelligence, robotics, cloud computing, consulting, blockchain, and computer software.

As of June 2024, IBM’s market capitalization was $158.55 billion, making it the 86th largest company in the world. This is ahead of companies such as Intel (INTC) but significantly behind other tech giants like Microsoft (MSFT) and Apple (AAPL). At the time of writing, the IBM stock was trading at $172.60.

So, how much dividend does IBM pay, and when? Learn all you need to about IBM dividends, before deciding whether it might be an attractive addition to your investment portfolio.

How Often Does IBM Pay a Dividend?

When does IBM pay dividends? IBM currently pays dividends four times a year: in March, June, September, and December. The last IBM dividend date was 10 June, when the company paid a cash dividend of $1.67 per share with an ex-dividend date of 9 May.

The ex-dividend date or the ex-EFF is the date post which a new investor is not eligible to receive that specific quarter’s dividend. The next IBM dividend is expected to be paid out in September, as scheduled; however, the exact date and amount are unknown.

Why Is IBM’s Dividend So High?

IBM is synonymous with computer software and is known as a pioneer in several technologies, such as robotics, cloud computing, automation, blockchain, and more. This extensive diversification across tech sectors has allowed the company to establish and nurture several income streams, allowing for robust earnings over decades.

As such, it is a prime example of a good value investing stock with consistency and strong fundamentals. However, IBM has also adapted to the times, taking advantage of the artificial intelligence boom by repositioning itself around AI and hybrid cloud under the guidance of current CEO Arvind Krishna.

As such, the company is also proving to be a formidable competitor for other AI companies such as Nvidia (NVDA) and Meta (META). IBM has also ramped up the focus on its own flagship AI products, such as WatsonX.

In an interview with Techopedia, Dr. Nicola Hodson, IBM UK and Ireland’s Chief Executive, said:

“Last year, we launched a platform called watsonx, an enterprise AI and data platform with a built-in governance layer that serves as an AI nutrition label. It allows enterprises to show transparently where the data in their AI models comes from and which pieces of data are being used to help drive the AI decision; it flags any inaccuracies or biases and can automate compliance with regulations and policies.”

This has given the company a significant earnings stream from which to keep paying generous dividends while also not comprising growth and innovation pursuits.

IBM Dividend History: 100+ Years of Payments

The IBM dividend history is a significantly long and decorated one, with the company having started paying dividends back in 1913, with the first cash dividend being $1 per share paid out on April 10, 1913. Back then, the company paid dividends in January, April, July and October.

Since then, IBM dividends have been consistently paid, with the company steadily increasing its payouts in the last several years.

The company has also seen 15 stock splits, the last one taking place on May 26, 1999. Furthermore, there have been 26 IBM stock dividend distributions, the last one being made on June 10, 1967. A stock dividend is a dividend payment made to shareholders that is made in stock rather than cash.

IBM’s Dividend Yield

The dividend yield ratio tells us how much a company pays in dividends with respect to the current stock price. A robust dividend yield is said to be anywhere between 2% and 5%.

The current IBM dividend yield is 3.9%, as of June 26, 2024. This is more than twice the S&P 500’s 1.3% yield, pointing to IBM’s strong fundamentals.

However, dividend yield cannot be considered in isolation while analyzing a stock, as companies with very good fundamentals and potential, such as Nvidia, could have very low yields due to their stock prices rising exponentially.

Naturally, the reverse is true as well, with dividend yields soaring for stocks whose share prices are falling.

IBM’s Dividend Payout

The dividend payout ratio highlights what percentage of a company’s earnings it chooses to pay out as dividends. A stable dividend payout ratio is between 30% and 50%.

Currently, IBM’s dividend payout ratio is 63.89%, which is higher than the benchmark range, which means that the company is paying quite a significant portion of its earnings as dividends.

This could potentially leave it with less cash to reinvest in the business down the line, although its multiple income streams should help cushion this.

IBM has also been given an A+ rating for dividend safety, an A rating for yield attractiveness, and a B rating for returns potential, according to Dividend.com.

IBM’s Dividend Growth

Although IBM’s dividend figure saw some ups and downs in the early years after it announced its first dividend in 1913, it has been growing steadily since 2000. The dividend was $0.12 in March 2000 and rose to $0.15 by June 2002.

By June 2005, dividends had touched $0.20, increasing to $0.50 by June 2008 and $0.65 by December 2012. By 2015, dividends had touched $1.30, with them inching up to $1.57 by December 2018.

As of June 2024, IBM dividends were $1.67.

Will IBM Ever Increase Its Dividend?

IBM has been consistently raising its dividend over the last several years, with the most recent hike being on June 10, 2024, when the company increased dividends from $1.66 per share in the previous quarter to $1.67.

At the time of writing, IBM stock has a ‘moderate buy’ rating, according to a consensus view of Wall Street analysts compiled by TipRanks, which might increase investor interest in the tech stock.

The company also has a robust synergy between its consulting business and software business, consistently driving growth and earnings. As such, it is likely to keep increasing dividends in the near future.

3 Tech Stocks That Pay Close or Better Dividends

What Are Dividends?

Dividends are payments to a company’s shareholders in exchange for buying and keeping a certain stock for a length of time, usually several years. They are calculated per share and are usually paid in cash, but they can also be stock, property, or scrip.

They are usually paid quarterly but can also be paid monthly, semi-annually, and yearly, depending on a company’s specific goals and strategy.

Dividends are distributed from a company’s net profits and, hence, are usually only given out during years of profits, with several companies preferring to cancel them when they make losses.

Why Are They Important to Investors?

Dividends are usually important to investors because they provide an extra avenue of reliable income. These supplementary funds can be used for retirement savings, reinvesting, or paying off debt.

Investors also tend to be more loyal to companies paying dividends, as they are seen as rewards for supporting the company through various market ups and downs.

The Bottom Line

IBM pays dividends quarterly in March, June, September, and December, with the last dividend of $1.67 paid on June 10, 2024. IBM’s dividends are among the highest among tech companies

The company has a dividend yield of 3.9%, more than twice the S&P Global’s dividend yield of 1.3%, due to its multiple income streams and strong fundamentals. However, it also has a dividend payout ratio of 63.89%, which is higher than the benchmark rate.

IBM has a history of consistent dividend payments dating back over 100 years, making it an attractive tech stock for dividend investors.

FAQs