IBM's Dividend Costs and Stock Performance Amid Revenue Slowdown
International Business Machines (NYSE: IBM) has seen its stock price fall by about 33% from a recent high, pushing the dividend yield to around 3%. The company pays out approximately $6.4 billion annually in dividends, which is roughly 60% of trailing earnings per share but only about 40% of expected free cash flow for 2026. Despite concerns over growth after IBM cut its revenue outlook following a weak second quarter, the firm still expects to generate around $15.7 billion in free cash flow this year. However, first-half results showed flat performance compared to last year and a decline in infrastructure revenue due to falling mainframe sales. The stock's valuation has shifted from growth expectations to one more aligned with slow-growth companies after the second-quarter report revealed softer-than-expected overall revenue gains.
Tickers: $IBM
Topics: dividends financial health free cash flow IBM (International Business Machines)