Few tech stocks are as reliable and mature as International Business Machines (NYSE: IBM) . Even fewer can match its massive free cash flows , totaling $12.1 billion over the last four quarters. And then Big Blue returned $6.6 billion of that cash profit to shareholders in the form of dividends and share buybacks .
The company is also firmly committed to raising its dividend payouts every year. Those quarterly checks paid $0.0625 per split-adjusted share 30 years ago. Today, the quarterly payout is $1.67 per share, or $6.68 per year. That's a 2,572% increase in three decades.
The dividend boosts have been slow in recent years, but IBM's board of directors insists on at least a symbolic increase every year. For example, the $1.67 dividend per share IBM paid on June 10 was a $0.01 step up from $1.66 per share in the previous four payouts. Though the dividend increases have been modest, they underscore IBM's commitment to shareholders, even in a tough economy.
Where there's smoking payout growth, there's a hot dividend yield
IBM's rising payouts have also resulted in a rich dividend yield of 3.5%. The average yield among S&P 500 stocks is 1.3%, Nasdaq-100 stocks offer an average yield of just 0.6%, and the most generous yield from the "Magnificent Seven" tech giants is Microsoft 's 0.8%. As mentioned, IBM's dividend stands out in comparison to other tech stocks -- especially when you limit the field of analysis to large-cap stocks.
So if you're looking for a robust dividend payout from a large tech stock, it's really hard to beat IBM. The company combines decades of staying power with rich cash flows, resulting in a shareholder-friendly dividend yield. On top of that, the company has a deep interest in artificial intelligence (AI), more than likely resulting in strong growth in the next few years.
Whether you're interested in IBM for its dividends, its AI growth opportunities, or its bargain-bin stock price, the stock looks like a great buy right now.
Before you buy stock in International Business Machines, consider this: