Jake Lerch, The Motley Fool

Wed, Jun 25, 2025, 6:45 AM5 min read

• IBM offers investors a solid combination of revenue growth and dividend payments.

• AT&T continues to refocus on its core business even as it improves its balance sheet.

• 10 stocks we like better than AT&T ›

Not all dividend stocks are boring. In fact, over the past 12 months, some of the top-performing shares on Wall Street have been dividend stocks. Let's take a look at two such companies and see why they have performed so well, and why now might be the right time for investors to buy.

First, there's International Business Machines (NYSE: IBM). With a staggering total return of more than 66% over the last 12 months, IBM stock has been on fire. It pays a quarterly dividend of $1.68, generating a dividend yield of about 2.4%. The recipe for its recent success comes down to its broad-based appeal; income-seeking investors appreciate the company's consistent dividend payments, and growth-oriented investors like its steady growth prospects.

Let's look at the dividends first. IBM's history of dividend payments stretches back more than a century, to 1916. Moreover, it has increased its quarterly dividend payment for 30 years in a row. Needless to say, that makes income-seeking investors very happy. After all, it's one thing for a company to make a dividend payment. It's quite another for regular and increasing dividend payments to be ingrained into the corporate culture.

Turning to IBM's fundamentals, the company has the free cash flow to easily support its dividend regime. Over the past 12 months, IBM reported $12 billion in free cash flow. Dividend payments amounted to about $6.2 billion.

If there's an area where value investors should keep a close eye on, it's IBM's balance sheet. The company does carry a significant amount of debt, totaling nearly $67 billion, with cash on hand of about $17 billion. Moreover, the company's net debt has been creeping upwards in recent years.

However, this leads us to IBM's growth prospects. The company wants to be a player in the new artificial intelligence (AI) market. That could lead to revenue growth, which has been hard to come by for IBM. For example, over the last 10 years, IBM's revenue has actually decreased, from $87 billion in 2015 to $63 billion today. Yet, observers expect that trend to reverse. According to analyst estimates compiled by Yahoo! Finance, IBM's revenue should rise to $66 billion this year and $69 billion by 2026.

IBM remains a solid choice for investors seeking a stock that combines decent dividend income with modest growth prospects.