IBM’s 3% yield attracts investors, but the payout consumes 60% of earnings and 40% of projected 2026 free cash flow.
IBM’s annual dividend payout totals $6.4 billion, or $6.76 per share, after the stock fell 33% from its 52-week high of $332.46 to $224. The company disbursed $3.2 billion in dividends in the first half of 2026 alone.
The payout ratio stands at 60% of trailing earnings per share, which management described as tight but sustainable. IBM generated $14.7 billion in free cash flow in 2025, up $2 billion year-over-year, and expects a $1 billion increase in 2026, targeting $15.7 billion.
With $6.4 billion in dividends, the payout would consume about 40% of projected free cash flow for 2026, down from 60% of earnings, providing a buffer despite recent growth outlook cuts.