IBM vs TXN: Dividend Yield, Growth & Safety Comparison
International Business Machines Corp (IBM) and Texas Instruments Inc (TXN) are both in the Information Technology sector, making them natural rivals for dividend investors. Both stocks offer similar yields — IBM at 2.30% and TXN at 2.49%. For dividend growth, TXN leads with a 5-year CAGR of 14.6% versus IBM's 8.9%. TXN holds the edge in dividend safety with a "Safe" rating. IBM is a Dividend Aristocrat with 30 years of consecutive increases.
Key Metrics Comparison
| Metric | IBM | TXN |
|---|
| Dividend Yield | 2.30% | 2.49% |
| Annual Dividend | $6.71 | $5.50 |
| 5-Year CAGR | 8.9% | 14.6% |
| Payout Ratio | 60% | 1% |
| Consecutive Years | 30 | 0 |
| Price | $263.04 | $226.09 |
Yield Comparison
Texas Instruments Inc (TXN) currently yields 2.49%, which is solid for the broader market. That's 0.19% more than International Business Machines Corp (IBM), which yields 2.30%. In dollar terms, TXN pays $5.50/share annually versus IBM's $6.71/share.
Dividend Growth
Over the past five years, TXN has grown its dividend at a 14.6% CAGR compared to IBM's 8.9%. IBM: Dividend growth is accelerating — the 3-year CAGR of 16.1% exceeds the 5-year rate of 8.9% and the 10-year rate of 5.9%. TXN: Dividend growth is accelerating — the 3-year CAGR of 20.6% exceeds the 5-year rate of 14.6% and the 10-year rate of 17.8%.
Dividend Safety
IBM's dividend safety is rated "Moderate." The payout ratio of 60% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x. TXN's dividend safety is rated "Safe." The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.0x. TXN's payout ratio of 1% is more conservative than IBM's 60%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in TXN generates approximately $249/year in dividend income, compared to $230/year from IBM — a difference of $19/year. At $100,000, that gap widens to $190/year.
Verdict
- Best for income: TXN
- Best for growth: TXN
- Best for safety: TXN
Frequently Asked Questions
Which has a higher dividend yield, IBM or TXN?
Texas Instruments Inc (TXN) has a higher dividend yield of 2.49% compared to International Business Machines Corp (IBM) at 2.30%.
Is IBM or TXN a better dividend growth stock?
Texas Instruments Inc has the stronger dividend growth with a 5-year CAGR of 14.6%, compared to International Business Machines Corp's 8.9%.
Which is safer for dividend income, IBM or TXN?
International Business Machines Corp's dividend safety is rated "Moderate" while Texas Instruments Inc is rated "Safe." The payout ratio of 60% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x. The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.0x.
How much income does $10,000 in IBM vs TXN generate?
A $10,000 investment in IBM generates approximately $230/year in dividends, while the same amount in TXN generates about $249/year.
Is IBM or TXN a Dividend Aristocrat?
International Business Machines Corp is a Dividend Aristocrat with 30 consecutive years of increases. Texas Instruments Inc does not currently qualify for aristocrat status.
Which has a lower payout ratio, IBM or TXN?
Texas Instruments Inc has a lower payout ratio of 1% compared to International Business Machines Corp's 60%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
IBM vs TXN: which is better for retirement income?
It depends on your priorities. TXN for current income, TXN for dividend growth, TXN for safety. Many retirement investors hold both for diversification.
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