June 23, 2025 a 07:47 am
IBM: Dividend Analysis - International Business Machines Corporation
International Business Machines Corporation (IBM) has consistently shown as a resilient player in the tech industry, known for its strong dividend history. With a consistent increase in dividends and a robust market presence, IBM is a prime choice for income-focused investors.
Overview 📊
IBM operates within the technology sector and is characterized by a commendable dividend yield of 2.68% and a current dividend per share of USD 6.55. It boasts an impressive 56-year history of dividend payments and has experienced no recent cuts or suspensions.
| Metric | Value |
|---|---|
| Sector | Technology |
| Dividend Yield | 2.68% |
| Current Dividend per Share | 6.55 USD |
| Dividend History | 56 years |
| Last Cut or Suspension | None |
Dividend History 🗣️
IBM's dividend history is pivotal for assessing its reliability and shareholder value proposition. The consistency in payments over the years indicates stability and trustworthiness in shareholder returns.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 3.35 |
| 2024 | 6.67 |
| 2023 | 6.63 |
| 2022 | 6.59 |
| 2021 | 6.33 |
Dividend Growth 📈
The dividend growth over the short and medium term exemplifies IBM's commitment to increasing shareholder returns. Steady increases in dividends reinforce investor confidence in the company's financial health.
| Time | Growth |
|---|---|
| 3 years | 1.74% |
| 5 years | 1.65% |
The average dividend growth is 1.65% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio 📉
Understanding payout ratios assists in evaluating dividend sustainability. IBM's EPS-based payout ratio of 111.10% and FCF-based payout ratio of 51.00% suggest that while dividends are well-covered by cash flow, the earnings cover may not be as robust.
| Key figure ratio | Value |
|---|---|
| EPS-based | 111.10% |
| Free cash flow-based | 51.00% |
IBM's current EPS payout ratio suggests dividends rely more heavily on cash flow, reflecting caution in future earnings-based payouts.
Cashflow & Capital Efficiency ✅
Examining cash flow and capital efficiency ratios provides insights into how well IBM generates and utilizes cash. Focusing on these metrics can assess operational strength and investment efficiency.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | 6.65% | 8.13% | 5.70% |
| Earnings Yield | 1.29% | 5.03% | 2.92% |
| CAPEX to Operating Cash Flow | 18.90% | 12.99% | 12.53% |
| Stock-based Compensation to Revenue | 1.63% | 1.83% | 2.09% |
| Free Cash Flow / Operating Cash Flow Ratio | 81.10% | 87.01% | 87.47% |
| Return on Invested Capital | 12.43% | 7.84% | 9.51% |
IBM's cash flow stability is reflected in consistent FCF yields over the years. The high CAPEX to operating cash flow ratio underlines significant reinvestment into operations.
Balance Sheet & Leverage Analysis ⚠️
Analyzing IBM's leverage and liquidity positions unveils its financial resilience and debt management capabilities. Strong ratios indicate stable financial health with manageable leverage.
| Factor | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 2.46 | 2.66 | 2.14 |
| Debt-to-Assets | 42.45% | 44.32% | 42.57% |
| Debt-to-Capital | 71.11% | 72.68% | 68.14% |
| Net Debt to EBITDA | 6.43 | 3.19 | 3.65 |
| Current Ratio | - | 0.96 | 1.04 |
| Quick Ratio | 0.87 | 0.93 | 1.00 |
| Financial Leverage | 5.80 | 6.00 | 5.02 |
IBM's managed leverage, with slight improvements in debt ratios over recent years, reflects a concerted effort to balance growth with debt.
Fundamental Strength & Profitability 📈
Fundamentals highlight IBM’s operational efficiency and profitability. Evaluating these metrics reveals areas of strength and growth opportunities.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 7.47% | 33.29% | 22.06% |
| Return on Assets | 1.29% | 5.55% | 4.39% |
| Net Margin | 2.71% | 12.13% | 9.60% |
| EBIT Margin | 3.92% | 16.65% | 11.97% |
| EBITDA Margin | 11.85% | 23.75% | 19.40% |
| Gross Margin | 54.00% | 55.45% | 56.65% |
| R&D to Revenue | 10.85% | 10.95% | 11.92% |
IBM boasts strong profitability metrics highlighted by an increasing gross margin, representing significant operational strength.
Price Development 📉
Dividend Scoring System ✅
| Criteria | Score | |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 2 | |
| Financial stability | 3 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 3 |
Total Score: 29 / 40
Rating 🗣️
IBM delivers a strong dividend profile marked by remarkable stability and consistency in payments. While growth rates in dividends have been modest, the robustness in financial stability ensures a sound investment for those seeking reliable income. Investors may consider IBM as a steady income-generating asset with potential for capital appreciation over the long term.