With all the noise and debate about the current tariff war, you could be forgiven for missing a pair of important shareholder announcements from two tech sector titans. In a matter of only a few days recently, both Apple(NASDAQ: AAPL) and IBM(NYSE: IBM) declared dividend raises. One of the companies even accompanied this with a new, jumbo-sized share buyback program.
Here’s more on the two lifts from the cornerstone stocks in the industry, and my take on whether they are buys with the enhanced payouts.
Apple stormed into May with its fiscal second quarter earnings report, which contained a few sweeteners for its investors. First and foremost was that dividend raise; the company hiked its quarterly disbursement by $0.01 per share, or 4%, over its predecessor to $0.26.
On top of that, the King of Cupertino is reaching into its bulging coffers for a new share repurchase program. Its board has authorized up to a breathtaking $100 billion for the initiative, which is actually less than the $110 billion announced the previous quarter.
Image source: Getty Images.
In a way, it’s good that management is setting aside a potentially big pile of dough for repurchases, because the stock might just need the help. That earnings report certainly wasn’t bad, but as it came from a company that’s had some powerfully encouraging quarters in the past, it didn’t really stand out.
Product revenue for familiar gadgets like the iPhone, iWatch, and Mac desktops — still the bulk of Apple’s top line — inched up less than 3% year over year to hit $68.7 billion. The services segment saw better improvement, rising 11% to $26.6 billion.
This has been the company’s dynamic for years. In this instance, it resulted in a slight beat on the consensus analyst for products and quite a narrow miss for services. At the end the day, Apple’s nearly $95.4 billion in total revenue topped the average pundit projection of $94.2 billion.
Net income also edged higher, past the collective analyst estimate. The company’s GAAP profitability was $24.8 billion, almost 5% better than the year-ago quarter’s result.
To be fair to Apple, it’s hard to grow significantly when both the top and bottom lines reach well into 11-figure territory. But I still like how it’s performing with services, and I feel it has numerous avenues for growth in that category alone. I’ve been an investor for years, and I’m holding on to my shares.
Apple’s freshly raised dividend is to be dispensed on May 15 to investors of record as of May 12. At the most recent closing stock price, its yield would be 0.5%.
One of the foundational companies in the U.S. tech sector — which is saying something given how sprawling and powerful the industry has become — IBM also has a relatively long history of dividend raises.
The one declared at the end of April marked 2025 as the 30th year in a row of increases. The refreshed quarterly payout will amount to $1.68 per share — like Apple, this is a $0.01 hike, which in percentage terms is well under 0.1%. That incremental bump is actually typical for IBM, which has been doing the $0.01 dividend raise dance since the start of this decade.
Interestingly, there are more parallels between IBM and Apple than just a $0.01 hike. Like its peer, IBM beat the average analyst projections for its most recently reported (first) quarter on both the top and bottom lines. These amounted to a respective $14.5 billion and almost $1.6 billion in non-GAAP (adjusted) terms.
However, as with Apple the quarterly figures raised concerns about an important part of IBM’s operations — the company’s classic consulting business, which posted a 2% year-over-year slump in revenue (to $5.1 billion). That was compounded by infrastructure, which at least is smaller; it declined 6% to $2.9 billion.
By contrast, the company’s No. 1 sales generator, software, rose 7% to hit $6.3 billion. Thankfully, software also happens to be a high-margin business for the company.
An important part of IBM’s business is federal government clients. It seems the recent cost-cutting measures undertaken by the Trump administration hit the consulting segment especially hard.
The federal efficiency measures story hasn’t yet played out, so it remains to be seen whether we can expect further declines in this business. If that occurs, the pressure will be on the software unit to keep the growth train running. I’d give IBM the benefit of the doubt, as it has good management and a history of making a buck even in trying times. I’d rate this stock a buy.
IBM’s new dividend is to be handed out on June 10 to stockholders of record as of May 9. It would boast an attractive dividend yield of 2.7% on the current share price.
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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.
