IBM Has Fallen 33% From Its High and Yields 3%. Here's What That Dividend Actually Costs the Company.

IBM shares have dropped 33% from their 52-week high, pushing the dividend yield to 3% as the company struggles with weak revenue momentum. The tech giant pays $6.4 billion annually in dividends, covered at a 40% payout ratio against expected 2026 free cash flow, and has increased its payout for 31 consecutive years.

The stock decline reflects fundamental weakness. IBM posted just 1% year-over-year revenue growth in Q2, prompting management to cut full-year guidance to 4-5% growth. Infrastructure revenue fell 7% as mainframe sales collapsed 42%, offsetting stability elsewhere in the business.

Despite the dividend streak and current yield, analysts warn the software segment needs to reaccelerate before the stock becomes attractive. The modest dividend growth alone doesn't justify entry at current valuations given the revenue headwinds and guidance cut.