Dell delivers jaw-dropping dividend news as AI sales accelerate | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Most dividend announcements don’t move the needle for investors. This one might.

Dell Technologies came into its fiscal third-quarter earnings call already riding high on a wave of AI momentum.

But it was a single commitment buried in the financial framework that caught income investors off guard: Dell (DELL) pledged to increase its quarterly dividend by at least 10% each year through fiscal 2030.

What makes the news even more compelling is the backdrop. AI is doing a lot of the heavy lifting here — and the numbers behind that business are getting hard to ignore.

Dell is bullish on AI growth

Dell locks in 10% annual dividend growth

At its October 2025 Securities Analyst Meeting, Dell CFO David Kennedy made the commitment official.

The server maker extended its dividend growth pledge, with at least 10% annual growth, through fiscal year 2030. That’s two years longer than the prior target.

Kennedy said,

Dell currently pays a $0.525 quarterly dividend, yielding $2.10 per share annually. At the stock’s recent price of around $117, the yield is roughly 1.80%.

It’s not the highest yield in tech, but what stands out is the combination of yield, growth, and a payout ratio so conservative that future hikes seem guaranteed.

Analysts covering DELL stock forecast its free cash flow to increase from $6.7 billion in fiscal 2026 (ended in January) to $9.83 billion in fiscal 2030. Given an annual dividend expense of $1.4 billion, Dell’s payout ratio is roughly 21%.

A low payout ratio coupled with FCF expansion should enable Dell to raise the annual dividend per share to $3.10 in fiscal 2030.

A snapshot of Dell’s key dividend metrics:

Current quarterly dividend: $0.525 per share
Annualized dividend: $2.10 per share
Dividend yield: approximately 1.80%
Payout ratio: approximately 21% — well below the 50% threshold most analysts consider safe
Dividend growth commitment: 10% or more annually through fiscal 2030
Years of consecutive dividend payments: four years (initiated in 2023)
Year-over-year dividend growth: approximately 12.3%
Capital returned to shareholders year-to-date: $5.3 billion (dividends plus buybacks combined)

A payout ratio sitting at just 21% means Dell is using less than one-fourth of its earnings to fund the dividend. That leaves a wide cushion for continued raises, even if profits dip temporarily.

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The company is also targeting a return of more than 80% of its adjusted free cash flow to shareholders each year — a figure it has exceeded, returning nearly 97% since the program launched.

Dell reports record AI orders

The dividend story makes much more sense when you look at what’s driving Dell’s cash generation. In its fiscal Q3:

Dell booked $12.3 billion in AI server orders, a quarterly record. That pushed its year-to-date AI order total to $30 billion, also a record.
Dell shipped $5.6 billion worth of AI servers during the quarter, bringing its year-to-date shipments to $15.6 billion.
Its backlog of AI orders awaiting shipment stands at $18.4 billion.

To put that in perspective: Dell shipped roughly $10 billion in AI servers in all of fiscal year 2025. This year, it expects to ship $25 billion — a year-over-year increase of more than 150%.

Total revenue for the quarter came in at $27 billion, up 11% year over year. Earnings per share hit $2.59, up 17%.

The company’s Infrastructure Solutions Group, which includes AI, traditional servers, and storage, grew 24% and posted its seventh consecutive quarter of double-digit growth.

COO Jeff Clarke was characteristically blunt about where things are heading.

“Token demand generation is not slowing. In fact, I’d argue we’re in the infancy of this curve,” Clarke said.

That pipeline covers demand from three distinct customer groups: large cloud companies (called Neoclouds), sovereign governments building national AI infrastructure, and traditional enterprises. All three are growing.

What next for DELL stock?

Dell has already deployed AI infrastructure for more than 3,000 enterprise customers. And its forward guidance only adds to the case. It expects to ship$9.4 billion in AI servers in its fourth quarter alone — nearly as much as it shipped in all of fiscal 2025.

For the full fiscal year, Dell guided for revenue of $111.7 billion, up 17%, with non-GAAP earnings per share of $9.92, up 22%.

That kind of earnings growth, paired with a sub-25% payout ratio, makes the case for continued dividend hikes almost self-evident.

Wall Street also forecasts DELL stock to expand adjusted EPS from $9.96 in fiscal 2025 to $17.50 in 2030. If the AI hardware stock is priced at 10.5x forward earnings, which is in line with its five-year average, it could gain almost 50% within the next three years.

Out of the 15 analysts covering DELL stock, 12 recommend “Buy”, two recommend “Hold” and one recommends “Sell”. The average Dell stock price target is $164, almost 40% above the current price.

There’s no guarantee that AI spending will hold at this pace indefinitely. Memory costs are rising across the industry, and Dell has flagged commodity inflation as a headwind heading into next year.

But Clarke noted that the company has navigated multiple DRAM cycles over the last few decades — and in each, it ultimately recovered costs through pricing adjustments.

With a five-quarter opportunity pipeline that continues to grow and a business model that generates cash across both AI infrastructure and commercial PCs, the income case for Dell stock looks stronger than it did six months ago.