An old-fashioned, tech workhorse is having a tough post-earnings session, however has nonetheless managed to trounce the S & P 500 in 2025 – and in addition rewards long-term traders who’re searching for portfolio earnings. Worldwide Enterprise Machines offered off sharply Thursday, down 7.6%, as traders punished the tech firm when it missed Wall Road’s estimates for software program income within the second quarter . Software program income for IBM got here in at $7.39 billion, up about 10% from the year-ago interval, however under the StreetAccount consensus estimate of $7.43 billion. IBM YTD mountain IBM shares in 2025 The software program income overshadowed an in any other case stable quarter for IBM, when adjusted earnings got here in at $2.80 per share on income of $16.98 billion, topping the $2.64 per share and $16.59 billion LSEG consensus. The 114-year-old tech bellwether additionally lifted its full-year money stream steering to greater than $13.5 billion. “We consider that IBM is well-positioned to capitalize on the present demand shift for hybrid and [artificial intelligence] purposes with extra enterprises seeking to implement AI for productiveness beneficial properties and drive this long-term worthwhile progress,” Wedbush Securities analyst Dan Ives stated in a Thursday notice. He stated he can be a purchaser “of any knee-jerk weak point” submit earnings. Those that do snap up IBM shares whereas they’re on sale – and stick to them for the long term – could possibly be rewarded. The unique blue chip tech inventory has been steadily elevating its dividend for many years, and traders who use every quarter’s earnings to purchase extra shares might see enhanced returns over time. A dividend aristocrat Courting again to 1926, dividends have contributed about 31% of the whole return of the S & P 500, whereas capital appreciation has contributed 69%, in accordance with S & P International . IBM is in an elite crowd of shares, often called the dividend aristocrats. These are corporations which have raised their annual dividend for a minimum of 25 consecutive years. For its half, IBM has now elevated its dividend for 30 straight years, with the corporate most lately asserting a hike in April to $1.68 a share. IBM has a present dividend yield of two.6%, and its annual dividend cost per share provides as much as $6.72. However the true energy of the earnings cost comes within the type of compounding progress over time and utilizing these dividends to purchase extra shares. On a value foundation, IBM shares are up 18% in 2025, however its whole return – factoring in reinvested dividends – is nearer to twenty%, in accordance with FactSet calculations. That compares to an 8% enhance on a value foundation for the S & P 500 this 12 months, and an 8.9% whole return. The place traders actually see the distinction, although, is after they stick to a inventory for the long term and make a degree of reinvesting these dividend funds. Over the previous 20 years, IBM’s share value went up greater than 220%, however on a complete return foundation the appreciation involves greater than 490%, reflecting the reward traders obtain not simply from shopping for extra inventory but additionally from receiving added dividends on all these newly-accumulated shares. A option to dollar-cost common Traders can verify with their brokerage agency to enroll in dividend reinvestment plans, that are often called DRIPs. The advantage of enrolling in a DRIP is that it permits traders to dollar-cost common right into a place, which means they purchase shares at common intervals whatever the value motion. There isn’t any ready for hearth gross sales. You may need to be choosy about which names you reinvest in, although. Shares with unreasonably excessive dividend yields could also be on a downward trajectory, and corporations which can be beneath stress could also be pressured to chop their funds to avoid wasting money. Traders may also contemplate diversifying their strategy and snap up a dividend-focused ETF as an alternative. The Vanguard Dividend Appreciation ETF (VIG) has an expense ratio of 0.05% and a return of seven.3% in 2025. Its constituents embody Broadcom, Microsoft and Costco Wholesale. In the meantime, the ProShares S & P 500 Dividend Aristocrats ETF (NOBL) has an expense ratio of 0.35% and a 2025 return of practically 6%. Names within the fund embody Emerson Electrical, Caterpillar and Fastenal.