IBM Dividend Survives Despite Shift to Software
IBM has maintained its streak of annual dividend increases since 2016, but the company behind the payouts has undergone significant changes. The quarterly dividend has grown from $0.95 in 2013 to $1.69 today, with an annualized forward dividend of $6.76 and a yield near 2.96%. However, the company's revenue growth is no longer driven by its traditional mainframe business.
Software now accounts for nearly 45% of IBM's revenue, with about 80% of it being recurring. The company's annual recurring revenue hit $24.6 billion, up 8%, while consulting grew just 0.2%. CEO Arvind Krishna attributed the shift to the company's transformation over the last five years.
The dividend is still covered by free cash flow, which generated $14.73B in 2025 and reached $4.8 billion in the first half of 2026. However, acquisitions and quantum investments are competing with the dividend for funds. IBM plans to spend more than $10 billion on quantum over the next five years, including a $1 billion cash contribution.