IBM stock prepares for 27th consecutive dividend hike ahead of Q1 earnings

Few things matter more to long-term investors than a company that keeps paying (and growing) its dividend year after year.A VanEck report states:“Dividend investing can provide steady income and long-term growth but requires careful selection to avoid unsustainable payouts and dividend traps.”As dividend payers tend to maintain solid balance sheets and stable cash flows, they make good defensive investments. That context matters right now, especially for shareholders of International Business Machines , a Dividend Aristocrat and a Dow 30 member, that has one of the most durable income track records in all of tech.IBM's enviable dividend growth historyInternational Business Machines (IBM) is expected to announce another dividend increase this month. If it does, it will mark the company's 27th consecutive year of dividend growth, a milestone that puts it in elite company.Related: Is IBM stock in the dividend bargain bin?The expected new quarterly payout is $1.6875 per share. That would represent a 0.45% increase from the current $1.68 quarterly distribution. It's a modest raise, but consistency counts for income-focused investors.IBM last declared a dividend of $1.68 per share in January 2026. It raised that payout last April by 0.6%, moving it from $1.67. Key dividend metrics for IBM stock:Current quarterly dividend: $1.68 per shareExpected new quarterly dividend: $1.6875 per shareExpected annual dividend: $6.75 per shareAnnual dividend yield: approximately 2.5%Five-year dividend growth rate: 1.53%20-year dividend growth rate: 11.2%Annual dividend expense (NTM): $6.27 billionFree cash flow (2026E): $15.65 billionDividend payout ratio: 40%Consecutive years of dividend growth: 26 (heading to 27)The payout ratio of about 40% means IBM is returning a meaningful share of earnings to shareholders while still keeping enough to invest in growth.A focus on IBM’s Q1 earningsIBM's Q1 2026 earnings report is scheduled for Wednesday, April 22. The timing makes this a pivotal week for the dividend-paying tech stock.Analysts expect IBM to post earnings of $1.81 per share and revenue of $15.6 billion for the quarter. In the year-ago period, it reported EPS of $1.60 per share and revenue of $14.54 billion. IBM's most recent quarterly earnings data showed the company reported $4.52 earnings per share for Q4, beating the consensus estimate of $4.29 by 5.30%. Wall Street is forecasting current-year revenue of $71.18 billion, with full-year normalized EPS of $12.35, up from $11.59 in the prior year.Analysts broadly expect IBM to beat Q1 estimates, with AI, hybrid cloud, automation, and cybersecurity highlighted as the key drivers to watch in the April 22 report.Wedbush reiterated an "outperform" rating and maintained a $340 price target on IBM, signaling strong analyst conviction that IBM's AI and hybrid-cloud strategy can drive upside. Wedbush analyst Dan Ives has also noted he sees roughly 35% upside as enterprise customers move from AI pilots to large-scale deployments.IBM is a top dividend stockIn recent years, IBM CEO Arvind Krishna has shifted the company's focus toward software, artificial intelligence, and hybrid cloud. IBM is expanding its software revenue baseRiccardo Savi/ Getty Images When Krishna took over in 2020, software accounted for roughly 20% of total revenue. By the end of 2025, that figure had climbed to around 45%.Its Red Hat business, acquired for $34 billion in 2019, is now generating nearly$2 billion per quarter in revenue, up dramatically from $3.4 billion annually at the time of the deal.IBM's mainframe business also posted a record year in 2025. And management has guided to revenue growth exceeding 5% in 2026, along with free cash flow of approximately $15.7 billion, allowing it to raise dividend payouts and target accretive acquisitions. More on dividend stocks:Costco quietly bumps its quarterly dividend by 13%How much to invest in Best Buy stock for $1,000 in 2026 dividendsEarly SCHD ETF investors now earn a 12.5% dividend yield on costIBM generated approximately$14.7 billion in free cash flow during 2025. This cash generation supports continued investment in research and development, strategic acquisitions, and shareholder returns through dividends and share repurchases.Citigroup described IBM as an AI survivor and enabler, a characterization that reflects the broader Wall Street view that IBM has successfully navigated the AI disruption narrative rather than falling victim to it.With earnings due April 22 and a potential dividend hike likely to follow, income investors have good reason to keep a close eye on IBM this week.Related: IBM CEO sends blunt message on AI and quantum computing