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

IBM's stock has declined 33% from its 52-week high, pushing its dividend yield to 3%. While the $6.4 billion annual dividend is covered by expected 2026 free cash flow (40% payout ratio) and the company has raised its dividend for 31 consecutive years, the stock decline reflects weak revenue growth of just 1% year-over-year in Q2. Management cut full-year guidance to 4-5% growth, with infrastructure revenue falling 7% due to a 42% mainframe decline. The analyst recommends waiting for software segment reacceleration before buying, as the modest dividend growth alone doesn't justify investment at current valuations.