---
title: "After Its Earnings Scare, Is IBM's Dividend Still Safe?"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/293333819.md"
description: "Despite missing Q2 earnings expectations and a stock sell-off, IBM's dividend remains safe. The payout ratio is around 60%, supported by $12.3 billion in free cash flow over four quarters, nearly double the $6.3 billion paid out. With a recent dividend increase and a yield of 3.2%, the company demonstrates confidence in sustainability. While short-term volatility persists, the high yield offers an attractive entry point for long-term investors seeking tech exposure."
datetime: "2026-07-21T11:26:55.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/293333819.md)
  - [en](https://longbridge.com/en/news/293333819.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/293333819.md)
---

# After Its Earnings Scare, Is IBM's Dividend Still Safe?

Last week was a rough one for **International Business Machines** (IBM +0.15%) as the company's preannounced results rattled the stock, and that's putting it lightly. Shares cratered, and fears mounted about the business's future, as IBM noted a shift in demand away from its products and services. Not only did the company fall short of expectations in the most recent quarter, but it also raised alarm bells about its future growth.

For dividend investors, it may also raise concerns about its payout. Is IBM's dividend, which now yields 3.2%, still safe?

![Elderly person looking at their bills.](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Nzk3MzkvZWxkZXJseS1wZXJzb24tbG9va2luZy1hdC10aGVpci1iaWxscy5qcGcmdz0zODQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Image source: Getty Images.

## How concerned should IBM investors be about the stock's dividend?

When a company's earnings come in lower than expected, and it's also facing some troubling headwinds, that may spell trouble for its dividend. Since a dividend is discretionary and not guaranteed, management could cut or, in extreme cases, suspend it if it's no longer financially viable to continue paying it.

For the second quarter, IBM announced that its adjusted earnings per share (EPS) totaled $2.93, which was lower than the $3.02 analysts had expected. It's a miss, but that alone doesn't necessarily mean the payout is in trouble. IBM's quarterly dividend is $1.69, which is well below those EPS figures.

Its payout ratio, based on _unadjusted figures_, is up around 60% over the most recent four quarters. The company's free cash flow has also totaled $12.3 billion during that stretch, which is nearly double what it has paid out in dividends over the past 12 months ($6.3 billion). Even if its earnings are a bit worse than expected, IBM's dividend should remain in fine shape. The tech company also recently increased it by one cent, which is a good sign of confidence that not only can the payout be sustainable, but that it is also viable to increase it. In five years, the company has boosted its dividend by a modest 3%.

Expand

![International Business Machines Stock Quote](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0lCTS5wbmcmdz0xMjg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

## NYSE: IBM

International Business Machines

Today's Change

(0.15%) $0.33

Current Price

$213.00

### Key Data Points

Market Cap

$200BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$208.82 - $216.28

52wk Range

$204.44 - $332.46

Volume

100.7K

Avg Vol

10.9M

Gross Margin

57.80%

Dividend Yield

3.16%

## Is IBM a good dividend stock to buy right now?

IBM's recent sell-off has pushed its yield higher, enabling investors to lock in a yield above its usual level. Thus, there's an incentive to buy now. While the stock may fall further after the full results come out, it may also rally if the sell-off proves a bit extreme.

For long-term dividend investors, IBM's stock may be worth buying despite the uncertainty, as it offers a fairly high yield (the **S&P 500** average is only 1.1%) while also giving investors exposure to growth opportunities in the tech sector. It can be a good buy for the long haul, but volatility may persist in the short term.

### Related Stocks

- [IBM.US](https://longbridge.com/en/quote/IBM.US.md)
- [IBX.US](https://longbridge.com/en/quote/IBX.US.md)
- [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md)

## Related News & Research

- [3 Numbers That Will Matter Most in IBM’s Upcoming Q2 Earnings](https://longbridge.com/en/news/293130693.md)
- [Is IBM stock in trouble?](https://longbridge.com/en/news/293222189.md)
- [IBM faces its biggest earnings test yet after a historic stock drop](https://longbridge.com/en/news/293520021.md)
- [IBM's second-quarter miss hits lighter second time around](https://longbridge.com/en/news/293520420.md)
- [Is IBM's crash really a buying opportunity?](https://longbridge.com/en/news/292958727.md)