After Its Earnings Scare, Is IBM's Dividend Still Safe?

Following a disappointing preannouncement of Q2 results, IBM's stock fell sharply, raising concerns among dividend investors. The company reported adjusted EPS of $2.93, missing analyst expectations of $3.02, and cited shifting demand away from its products. Despite the earnings miss, the article argues IBM's dividend remains safe. The quarterly dividend of $1.69 is well below adjusted EPS, the payout ratio is around 60% on an unadjusted basis, and free cash flow of $12.3 billion over the past year nearly doubles the $6.3 billion paid in dividends. IBM recently increased its dividend by one cent, signaling confidence. The sell-off has pushed the yield to 3.2%, well above the S&P 500 average of 1.1%, making the stock potentially attractive for long-term dividend investors despite short-term volatility.