Apple and IBM Announce Significant Dividend Increases for Shareholders

Amid the ongoing discussions surrounding the current tariff conflict, two major tech giants have made impactful shareholder announcements. Recently, both Apple (NASDAQ: AAPL) and IBM (NYSE: IBM) announced increases in their dividends, with one of these companies also introducing a substantial share buyback initiative.

Apple’s Dividend and Buyback Plan

Apple kicked off May with its fiscal second quarter earnings report, which featured encouraging news for its investors. The standout announcement was a 4% increase in the quarterly dividend, raising it by $0.01 per share to $0.26. Additionally, Apple’s board authorized an impressive $100 billion for a new share repurchase program, although this is slightly lower than the previous quarter’s $110 billion announcement.

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This allocation for stock buybacks could be essential as the company’s recent earnings report did not stand out as it had in previous quarters. Revenue from core products, including the iPhone, iWatch, and Mac desktops, rose by less than 3% year over year, totaling $68.7 billion. However, the services segment showed better growth, with an 11% increase to $26.6 billion.

Ultimately, Apple’s total revenue for the quarter reached nearly $95.4 billion, surpassing the average analyst projection of $94.2 billion. Net income also improved, hitting $24.8 billion—a nearly 5% increase from the same quarter a year earlier. While growing at such a large scale can be challenging, Apple’s services division seems to provide significant avenues for future growth. I plan to hold my shares as an investor.

The new dividend will be paid on May 15 to shareholders of record as of May 12, offering a yield of 0.5% based on the most recent closing stock price.

IBM’s Consistent Dividend Growth

As a cornerstone of the U.S. tech landscape, IBM has a lengthy history of raising dividends. The increase announced at the end of April marks the company’s 30th consecutive year of dividend hikes. The updated quarterly payout stands at $1.68 per share, a modest $0.01 increase—typical for IBM in recent years.

IBM reported solid results for its first quarter, surpassing analyst expectations for both revenue and earnings. The company generated $14.5 billion in revenue and nearly $1.6 billion in non-GAAP (adjusted) net income. However, concerns linger due to a 2% decline in revenue from its consulting segment, which fell to $5.1 billion, and a 6% decrease in the infrastructure segment to $2.9 billion.

In contrast, IBM’s software segment, which is its largest revenue generator, witnessed a 7% increase, reaching $6.3 billion. This segment is crucial, especially given the company’s reliance on federal government clients, which have faced recent budgetary pressures. The long-term implications of these cuts remain uncertain, emphasizing the importance of the software division in sustaining growth.

I believe IBM has capable management and a track record of navigating difficult periods, making its stock a viable investment option. The new dividend will be distributed on June 10 to shareholders of record as of May 9, yielding approximately 2.7% based on the current share price.

Investment Considerations for Apple

Before investing in Apple, it’s worth noting that it did not make the recent recommendations from our analyst team, who have identified 10 other stocks with promising potential for returns. Investment history shows that identifying the right stocks can lead to significant gains, as demonstrated by past recommendations like Netflix and Nvidia.

Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple and International Business Machines. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.