Cisco Systems Sharply Increases Its Dividend

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Technology companies are not known for paying dividends, but some big caps in the tech space do return cash to shareholders through dividends.

One of them is networking giantCisco Systems ( CSCO ), which announced a big jolt to its dividend late Wednesday, when it reported quarterly results.

As part of a strategy aimed at giving back cash to shareholders, Cisco boosted its quarterly dividend by a whopping 75% to 14 cents a share. The dividend will be paid Oct. 24 to shareholders of record Oct. 4.

The hike represents a more than doubling of its payout since the company started paying dividends in April 2011.

"Cisco has the financial strength and flexibility to effectively invest in our business, pursue strategic opportunities, such as acquisitions, as well as return a minimum of 50% of our free cash flow annually through dividends and share repurchases to our shareholders," said Chief Financial Officer and Executive Vice President Frank Calderoni in a press release.

During its fiscal 2012 ended in July, the company paid $1.5 billion in dividends to shareholders and bought back $4.4 billion of its own shares.

On an annualized basis, Cisco pays 56 cents a share for a yield of about 3.2%. Cisco's yield is higher than that of other dividend-paying big-cap techs. Chip gear makerApplied Materials ( AMAT ) has a 3.1% yield andMicrosoft's ( MSFT ) is 2.6%.Apple ( AAPL ), which just paid its first shareholder dividend in 17 years, has a 1.7% yield.

Cisco's dividend raise was announced the same day as its fiscal fourth-quarter results. Earnings grew 17% to 47 cents a share, 2 cents above views. Sales rose 4% to $11.69 billon. Top-line growth was the slowest in four quarters, but still topped expectations. Although Cisco's quarterly earnings growth has been uneven in recent years, it remains relatively steady.

The company gave a lukewarm sales guidance and warned of tough business conditions in Europe over the next few quarters.

Cisco's stock jumped to a three-month high Thursday and is building the right side of a new base.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Personal Finance , Investing Ideas
More Headlines for: AAPL , AMAT , CSCO , MSFT


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