IBM's Century-Long Dividend Is Safe for Now, but Growth Is Modest

IBM has paid a quarterly dividend without interruption since 1916, but it has not raised the payout every year for that entire period. The more precise record is 31 consecutive annual increases, an important distinction for investors evaluating the durability of the company's income history.

The current quarterly dividend is $1.69 a share, or $6.76 annually. The latest increase was one cent, only about 0.6%. At the $233.24 share price cited by the source, the indicated yield was roughly 2.9%. That is useful income, but the small raise signals that management is prioritizing balance-sheet flexibility and investment over rapid dividend growth.

Cash generation still provides a meaningful cushion. IBM produced $14.734 billion of free cash flow in 2025 and paid $6.255 billion of dividends, a payout of about 42% on that measure. In the first half of 2026, free cash flow was $4.8 billion and dividend payments were about $3.2 billion. Management expected full-year free cash flow to increase by more than $1 billion, which would improve coverage if achieved.

The balance sheet deserves equal attention. IBM ended the second quarter with $8.2 billion of cash, restricted cash and marketable securities after investing $10.5 billion in acquisitions during the year. Total debt was $62 billion, including $13 billion tied to IBM Financing. Acquisitions can strengthen software and consulting capabilities, but they also compete with shareholders for cash and increase execution risk.

Second-quarter revenue was $17.162 billion, up 1.1%, while operating earnings per share of $2.93 missed the $2.97 consensus cited in the source. Software grew 5.1% and Red Hat 11%, but IBM Z revenue fell 42% as the mainframe cycle cooled.

The dividend appears covered by cash flow, yet the income case is about reliability rather than fast growth. Investors should watch whether software momentum and acquired businesses lift free cash flow enough to reduce leverage and support larger raises without weakening investment in the core portfolio.