IBM Has Fallen 33% From Its High and Yields 3%. Here’s What That Dividend Actually Costs the Company. | The Motley Fool

International Business Machines (IBM +1.65%) trades at about $224 as of this writing, roughly 33% below its 52-week high of $332.46. The slide has pushed the technology veteran’s dividend yield to about 3% — a level that tends to attract income investors’ attention.

A yield is only half of a dividend’s story, though. The other half is what the payments actually cost the company, and whether the underlying business produces enough cash to keep writing the checks. So, what does IBM’s dividend cost?

About $6.4 billion a year. The company paid $3.2 billion of dividends in the first half of 2026 alone. At $1.69 per quarter, or $6.76 per year, the payout consumes about 60% of IBM’s trailing earnings per share of a bit over $11.

The cash behind the checks

A 60% payout ratio on earnings sounds tight, and after a quarter in which the company cut its own growth outlook, it deserves a hard look. However, the coverage is sturdier than it first appears.

IBM…