International Business Machines Corporation (NYSE:IBM) is one of the 10 Technology Dividend Aristocrats to Buy in 2025.
Commonly known as Big Blue, International Business Machines Corporation (NYSE:IBM) is an American multinational tech company that offers a wide range of services, including hybrid cloud solutions. It’s considered one of the top dividend-paying companies in the tech sector, thanks to its consistent cash generation, solid yield, and long history of dividend growth. However, the company’s revenue growth has been somewhat uneven, which could be a point of concern for some investors.
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On April 30, International Business Machines Corporation (NYSE:IBM) announced a quarterly dividend of $1.68 per share, marking a 0.6% increase from its previous payout. While the bump was modest, it extended the company’s streak of annual dividend increases to 30 consecutive years. This ongoing dividend growth is backed by robust cash flows. In the latest quarter, IBM reported $4.4 billion in operating cash flow and $2 billion in free cash flow, returning $1.5 billion to shareholders through dividends during the same period.
That said, International Business Machines Corporation (NYSE:IBM)’s top-line performance over the past five years hasn’t shown consistent acceleration. Its annual revenue increased from $57.3 billion in 2021 to $62.7 billion in 2024, which is a gradual climb that might fall short of expectations for those seeking rapid dividend hikes. Moreover, the company’s payout ratio over the trailing twelve months stands above 110%, which raises some concerns about the sustainability of its dividends.
Even so, the firm has been increasing its dividends at a more modest pace, likely in line with its cash flow levels and ongoing investment needs. This cautious approach could help preserve its dividend over the long run. Also, the company’s steady dividend payments and a yield of 2.4% provide a sense of reliability and income stability for long-term investors.
While we acknowledge the potential of IBM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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