International Business Machines Corp. : IBM-US: Dividend Analysis : February 10th, 2017 (record date) : By the numbers : March 22, 2017

Our analysis is based on comparing International Business Machines Corp. with the following peers – Microsoft Corporation, HP Inc., Oracle Corporation, Intel Corporation, Cisco Systems, Inc., SAP SE Sponsored ADR, Accenture Plc Class A, VMware, Inc. Class A, Alphabet Inc. Class A and Apple Inc. (MSFT-US, HPQ-US, ORCL-US, INTC-US, CSCO-US, SAP-US, ACN-US, VMW-US, GOOGL-US and AAPL-US).

International Business Machines Corp.’s dividend yield is 3.22 percent and its dividend payout is 44.42 percent. This compares to a peer median dividend yield of 2.09 percent and a payout level of 34.81 percent. This type of dividend performance might make it a good stock for dividend investors. In addition, the company’s relatively good dividend quality score of 83 out of a possible score of 100 points to some sustainability of its robust payout ratio, and underscores its attractiveness for dividend investors seeking current income.

Dividend Yield
Dividend Quality Score

Dividend Quality Overview

  • Over the last twelve months (prior to December 31, 2016), IBM-US paid a high quality dividend, which represents a yield of 3.16% at the current price.
  • Dividends paid during each of the last five years were consistently of high quality.
  • The ending cash balance, with a dividend coverage of 1.62x, provides a moderate cushion in case of a significant reduction of cash flows in the future.
Dividend Quality Score Vs Dividend Yield

Quadrant label definitions. Hover to know more

High Score;High Yield, High Score;Low Yield, Low Score;Low Yield, Low Score;High Yield

Dividend Coverage

Over the last twelve months (prior to December 31, 2016), IBM-US paid a high quality dividend.

The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 3.23x), investing cash flow (coverage of -2.09x), issuance cash flow (coverage of -0.10x) and twelve-month prior cash (coverage of 1.56x), for a total dividend coverage of 2.62x.

IBM-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -0.67x). Thus, the total coverage including share buybacks is 3.29x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.

Dividend Coverage by Cash Flow (TTM)

These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.

Dividend History

Item 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31 Latest
Dividend Yield (%) 1.76 2.05 2.68 3.68 3.35 3.22
Dividend Payout (%) 22.96 24.76 25.63 36.93 44.42 44.42

A complete list of metrics and analysis is available on the company page.

Company Profile

International Business Machines Corp. is an information technology company, which provides integrated solutions that leverage information technology and knowledge of business processes. It operates through the following segments: Global Technology Services, Global Business Services, Software, Systems Hardware, Global Financing, and Other. The Global Technology Services segment provides information technology infrastructure services ranging from strategic outsourcing, integrated technology services, cloud, and technology support services or the maintenance services. The Global Business Services segment delivers a range of solutions including consulting, and systems integration, application management services, and global process services. The Software segment consists primarily of middleware and operating systems software which supports information management, Tivoli, workforce solutions, and others. The Systems Hardware segment refers to infrastructure technologies such as server, and storage. The Global Financing segment relates to the acquisition of information technology systems, software and services by providing financing solutions such as client financing, commercial financing, and remanufacturing and remarketing. The company was founded by Charles Ranlett Flint and Thomas J. Watson Sr. on June 16, 1911 and is headquartered in Armonk, NY.

Disclaimer

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