What’s in store for IBM’s dividends in 2025? Here’s how Big Blue’s financial trends and payout policies might affect your portfolio.
Computing-veteran International Business Machines (IBM -6.17%) issued its first dividend check in 1913, and the quarterly payouts have never stopped. The company has also been raising its payout per share for 28 years, and that trend should continue for the foreseeable future.
IBM Dividend data by YCharts.
Therefore, I can’t tell you the exact amount of IBM’s dividend payments in 2025. The company will probably raise the payout in June, as it has done every year since 1995.
I suppose that IBM will issue a symbolic quarterly dividend boost of $0.01 per share next year, resulting in a full calendar-year payout of $6.71 per share. Management might have more bullish ideas, though.
IBM’s free cash flow has been rising in the last couple of earnings reports. If the trend of stronger cash profits stays on track, I wouldn’t be surprised to see Big Blue boosting the payout by more than $0.01 next summer.
IBM’s potential dividend adjustments
If you’d rather view IBM’s dividend payouts in the form of total dividend expenses, even a larger quarterly boost next year would probably land the full-year dividend expense within a rounding error of $6.2 billion. That’s just over half of this fiscal year’s expected free cash flow of at least $12 billion and probably a smaller portion of next year’s growing cash profits.
IBM’s profits are booming, thanks to strong software sales and a rising presence in the market for enterprise-class artificial intelligence (AI) services. The watsonx generative AI platform now has more than $3 billion of orders in the books, up from $2 billion three months ago. Most of those orders are for consulting services, rather than software licenses, underscoring the unique business advantage of IBM’s robust consulting segment.
IBM should pay dividends of at least $6.71 per share next year, adding up to roughly $6.2 billion in total dividend expenses. And these costs are becoming a smaller portion of IBM’s growing cash flow.
Anders Bylund has positions in International Business Machines. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.