Chevron or IBM: One of These Dividends Costs $17 Billion a Year to Protect
Chevron posted record production while IBM leaned on software to survive a mainframe slump, but the real battle between these two dividend stalwarts plays out in how much cash each company burns before shareholders collect a single cent.
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When Chevron (NYSE:CVX | CVX Price Prediction) and IBM (NYSE:IBM) reported second-quarter results this summer, the former rode record barrels from its Hess deal, while the latter leaned on software as mainframe sales declined. Capital spending shows which dividend is harder to fund.
Record Barrels for Chevron, a Mainframe Trough for IBM
Chevron’s production rose 20% to a record 4,070 thousand barrels of oil equivalent per day (MBOED) in its July 31, 2026, report, proof the Hess assets are pulling weight. Downstream earnings hit $4.87 billion versus $737 million a year earlier, a refining boom. Brent crude averaging $104 per barrel flattered both figures.
IBM’s July 22, 2026, report missed the $2.97 EPS consensus with $2.93, as IBM Z revenue fell 42% between mainframe cycles. Red Hat grew 11%, demonstrating that recurring software revenue continues to expand. IBM’s CFO called free cash flow “one of the two key leading indicators” of its investment thesis.
Chevron Owes $17 Billion to Its Oil Fields First
Fiscal 2025 operating cash flow reached $33.94 billion, but capital expenditures took $17.35 billion before any shareholder got paid. The trend makes the load greater:
| Fiscal Year | Net Income | Capex | Dividends Paid |
|---|---|---|---|
| 2023 | $21.37B | $15.83B | $11.34B |
| 2024 | $17.66B | $16.45B | $11.80B |
| 2025 | $12.30B | $17.35B | $12.75B |
Net income fell each year while capex and dividends both rose. Greater spending comes with the territory: integrated producers must reinvest to replace pumped reserves. Despite these pressures, operating cash flow still covered the $12.75 billion dividend obligation.
IBM’s Low Capex Comes With a Rising Interest Bill
| Fiscal Year | Operating Cash Flow | Capex | Dividends Paid | Interest Expense |
|---|---|---|---|---|
| 2023 | $13.93B | $1.25B | $6.04B | $1.61B |
| 2024 | $13.45B | $1.05B | $6.15B | $1.71B |
| 2025 | $13.19B | $1.09B | $6.26B | $1.94B |
Operating cash flow held about flat and capex fell, while net income jumped to $10.59 billion in 2025 from $6.02 billion in 2024. Interest expense rose every year, a growing claim on the same cash.
AI Power Deals and IBM’s Cash Target Set the Next Test
Chevron’s 20-year, 2.67 GW power deal with Microsoft (NASDAQ:MSFT) for a West Texas data center, which ties an oil major to the AI build-out IBM sells into, is worth watching. IBM must deliver the approximately $1 billion free cash flow increase it is targeting for 2026. Reaching it would widen the dividend margin further.
Why IBM’s Dividend Looks Easier to Fund, Debt and All
As of September 25, 2026, premarket trading, Chevron stood at $203.35, up 37.1% year to date with a yield near 3.4%, while IBM traded at $228.27, down 21.4%. Momentum favors Chevron.
Funding tells a different story. IBM needs far less capital to operate, so more cash reaches shareholders. Chevron suits income investors who are comfortable tying payouts to oil prices.
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Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.
Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community.
Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.
Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, moderating workshop sessions at regional conventions.
