Yahoo Finance International Business Machines Corp's Dividend Analysis
Exploring the Sustainability and Growth of IBM's Dividend Payments
International Business Machines Corp (NYSE:IBM) recently announced a dividend of $1.67 per share, payable on 2024-06-10, with the ex-dividend date set for 2024-05-09. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into International Business Machines Corp's dividend performance and assess its sustainability.
What Does International Business Machines Corp Do?
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IBM looks to be a part of every aspect of an enterprise's IT needs. The company primarily sells software, IT services, consulting, and hardware. IBM operates in 175 countries and employs approximately 350,000 people. The company has a robust roster of 80,000 business partners to service 5,200 clientswhich includes 95% of all Fortune 500. While IBM is a B2B company, IBM's outward impact is substantial. For example, IBM manages 90% of all credit card transactions globally and is responsible for 50% of all wireless connections in the world.
A Glimpse at International Business Machines Corp's Dividend History
International Business Machines Corp has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. International Business Machines Corp has increased its dividend each year since 1994. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 30 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down International Business Machines Corp's Dividend Yield and Growth
As of today, International Business Machines Corp currently has a 12-month trailing dividend yield of 3.93% and a 12-month forward dividend yield of 3.95%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, International Business Machines Corp's annual dividend growth rate was 0.60%. Extended to a five-year horizon, this rate increased to 1.20% per year. And over the past decade, International Business Machines Corp's annual dividends per share growth rate stands at 5.50%.
Based on International Business Machines Corp's dividend yield and five-year growth rate, the 5-year yield on cost of International Business Machines Corp stock as of today is approximately 4.17%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, International Business Machines Corp's dividend payout ratio is 0.67.
International Business Machines Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks International Business Machines Corp's profitability 7 out of 10 as of 2024-03-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. International Business Machines Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and International Business Machines Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. International Business Machines Corp's revenue has increased by approximately 2.90% per year on average, a rate that underperforms approximately 65.33% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, International Business Machines Corp's earnings increased by approximately 3.50% per year on average, a rate that underperforms approximately 59.84% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -8.00%, which underperforms approximately 81.72% of global competitors.
Next Steps
Considering International Business Machines Corp's consistent dividend payments, modest growth in dividend rates, and a stable payout ratio, the dividends appear sustainable in the near term. However, investors should keep an eye on the company's growth metrics and profitability to ensure long-term sustainability. For those interested in finding more high-dividend yield opportunities, GuruFocus Premium users can use the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
