IBM's dividend growth has slowed to a crawl, with the company prioritizing AI and debt reduction over shareholder payouts, while Microsoft continues to offer more robust income growth.
Microsoft's quarterly dividend has grown from $0.13 to $0.98 since 2010, positioning it as a stronger pick for real income growth compared to IBM.
IBM's one-cent quarterly dividend raise fails to keep pace with inflation despite 31 years of increases, and its shares are down over 20% year to date.
Cisco's dividend has risen from $0.06 to $0.42 since 2011, but its latest penny increase indicates slowing dividend growth momentum.
Oracle's dividend was raised to $0.50 in early 2025 and has remained unchanged since, showing no recent growth.
IBM has extended its dividend increase streak to 31 years, but the latest one-cent quarterly hike fails to keep pace with inflation. While the company maintains a 2.83% yield and strong cash flow coverage, capital is increasingly diverted toward debt reduction and AI investments, leaving income-focused investors looking toward peers like Microsoft for superior growth.
Yes, IBM's dividend remains well-covered by its free cash flow, which reached $14.73 billion in 2025 against a $6.255 billion payout.