November 05, 2025 a 02:47 am
IBM: Dividend Analysis - International Business Machines Corporation
International Business Machines Corporation (IBM) boasts a long-standing history of steady dividends, which serves as a testament to its financial resilience and commitment to returning value to shareholders. With a current dividend yield of 2.23% and a history of 56 consecutive years without a cut or suspension since 1994, IBM presents an attractive option for income-focused investors. However, potential investors should carefully consider its high payout ratio and leverage status, reflecting both strengths and potential vulnerabilities.
📊 Overview
The overview provides an insight into IBM's sector positioning and its dividend metrics, which come with several strengths, such as an established dividend history.
| Category | Details |
|---|---|
| Sector | Technology |
| Dividend yield | 2.23 % |
| Current dividend per share | 6.56 USD |
| Dividend history | 56 years |
| Last cut or suspension | 1994 |
📉 Dividend History
IBM's dividend history highlights its commitment to consistent shareholder returns, making it a staple for income investors. A visually stable dividend payment history underscores its capacity to maintain payouts through various economic cycles.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 6.71 |
| 2024 | 6.67 |
| 2023 | 6.63 |
| 2022 | 6.59 |
| 2021 | 6.33 |
📈 Dividend Growth
The growth of dividends over time is a critical indicator of financial health and management's confidence in future cash flows. IBM's moderate growth trajectory reflects its evolving business model in conjunction with macroeconomic challenges.
| 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
The payout ratio signifies the sustainability of a company's dividend policy. IBM's EPS-based ratio of 77.47% and FCF-based ratio of 47.02% highlight the payout strength but also signal cautious optimism regarding future earnings capacity.
| Key figure | Ratio |
|---|---|
| EPS-based | 77.47 % |
| Free cash flow-based | 47.02 % |
The EPS-based payout ratio is relatively high, suggesting IBM’s dividend is largely supported by its earnings. The FCF-based ratio presents a healthier view, indicating efficient cash flow management.
Cashflow & Capital Efficiency
Understanding IBM's cash flow generation and capital efficiency is critical to evaluating its capacity to maintain dividend payouts and invest in growth opportunities.
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Free Cash Flow Yield | 5.71 % | 8.13 % | 6.65 % |
| Earnings Yield | 2.92 % | 5.03 % | 1.29 % |
| CAPEX to Operating Cash Flow | 12.53 % | 12.99 % | 18.90 % |
| Stock-based Compensation to Revenue | 2.09 % | 1.83 % | 1.63 % |
| Free Cash Flow / Operating Cash Flow Ratio | 87.47 % | 87.00 % | 81.10 % |
IBM's cash flow and capital efficiency reflect solid fundamentals with stable free cash flow yields and prudent CAPEX policies. However, the need for ongoing R&D investment is evident for sustaining technological leadership.
Balance Sheet & Leverage Analysis
Balance sheet analysis provides insights into IBM's financial strength, enabling assessment of its ability to cover obligations and fuel future growth.
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Debt-to-Equity | 2.14 | 2.66 | 2.46 |
| Debt-to-Assets | 42.57 % | 44.32 % | 42.45 % |
| Debt-to-Capital | 68.14 % | 72.68 % | 71.10 % |
| Net Debt to EBITDA | 3.65 | 3.19 | 6.43 |
| Current Ratio | 1.04 | 0.96 | 0.92 |
| Quick Ratio | 1.00 | 0.93 | 0.87 |
| Financial Leverage | 5.02 | 6.00 | 5.79 |
IBM demonstrates moderate to high leverage, evident in its debt ratios, though it maintains adequate liquidity profiles. A vigilant debt management strategy is crucial to support financial stability and investment potential.
Fundamental Strength & Profitability
Examining IBM's fundamental metrics is vital for understanding its operational efficiency and profitability scope, essential for more extended term sustainability and shareholder value creation.
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Return on Equity | 22.06 % | 33.29 % | 7.47 % |
| Return on Assets | 4.39 % | 5.55 % | 1.29 % |
| Margins: Net | 9.60 % | 12.13 % | 2.71 % |
| EBIT Margin | 11.97 % | 16.65 % | 3.92 % |
| EBITDA Margin | 19.40 % | 23.75 % | 11.85 % |
| Gross Margin | 56.65 % | 55.45 % | 54.00 % |
| Research & Development to Revenue | 11.92 % | 10.95 % | 10.85 % |
IBM’s remarkable ROE and margin improvements in 2023 indicate reinforcing profitability. Continuing to balance cost management while investing in technological advancement remains key for future growth.
📈 Price Development
Dividend Scoring System
| Criteria | Description | Score |
|---|---|---|
| Dividend yield | Current return on investment through dividends. | 3 |
| Dividend Stability | Consistency in payment over years. | 4 |
| Dividend growth | Growth trend in dividends. | 3 |
| Payout ratio | Portion of earnings paid as dividends. | 3.5 |
| Financial stability | Balance sheet strength and financial resilience. | 3.5 |
| Dividend continuity | Historical record of dividend payment. | 5 |
| Cashflow Coverage | Cash flow ability to cover dividends. | 4 |
| Balance Sheet Quality | Evaluation of debt versus assets. | 3 |
Total Score: 29.5 / 40
🗣️ Rating
IBM remains a robust choice for dividend investors seeking stability with moderate growth despite some challenges due to its high payout ratios. Its longstanding history of consistent dividends enhances its appeal. Investors should keep a cautious watch on financial leverage and payout expansion for long-term confidence.