Cisco Systems Hikes Quarterly Dividend nearly 14% (CSCO)

Even after seven consecutive years of rising dividends, Cisco Systems, Inc. (NASDAQ:CSCO) rewarded its shareholders with another quarterly dividend hike of nearly 14% for the current quarter and a dividend yield of 3%.

While the 3% yield does not seem very high, it is significantly higher than the average yield of the Technology sector and the highest yield in the Network & Communications Devices industry segment. In addition to the rising dividend income, the company’s share price gained more than 30% for a combined total return on shareholder’s investment in excess of 35% over the past 12 months.

The company scheduled its next dividend distribution on April 25, 2018. On that date, the company will pay a dividend to each of its shareholders of record prior to the April 4, 2018, ex-dividend date.

Cisco Systems, Inc. (NASDAQ:CSCO)

Founded in 1984 and headquartered in Silicon Valley’s San Jose, California, Cisco Systems, Inc. designs, manufactures and sells Internet Protocol (IP) based networking and other products related to the communications and information technology industry. With nearly 16,000 employees in the San Jose area, Cisco Systems is the largest private employer in Silicon Valley and the second largest overall behind only the County of Santa Clara administration.

Cisco Systems is also the largest networking company in the world and offers switching, routing and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers. Additional products in the company’s portfolio include private wireline and mobile networks, unified communications products, conferencing products and business messaging products. Cisco Systems also offers internet and e-mail security products, cloud storage technology, service provider video software and technical support services.

The company boosted its quarterly dividend payout 13.8% from the previous period’s $0.29 to the upcoming $0.33. The total annualized dividend amount for 2018 is $1.32, which currently yields 2.9%. While the dividend payout grew at a brisk pace over the past few years, the share price managed to grow at a similar rate to keep the current yield to no more than 0.5% above the company’s average yield over the past five years.

The company’s current 3% yield is 144% above the 1.22% average yield of the entire Technology sector. Additionally, Cisco Systems’ current yield is mmore than 250% higher than the simple average yield of all the companies in the Networking & Communications Devices segment. However, that statistic is misleading since only three companies currently distribute dividends to their shareholders. These three companies currently offer yields in a narrow range just below 3%. Cisco’s current 3% yield is the highest of the group and the lowest yield is 2.75%.

The company has hiked its total annual dividend payout every year since it began paying dividends in 2011. Over the past seven years, the total annual dividend amount advanced 450% by growing at an average rate of 27.6% per year.

The company’s share price entered the trailing 12-month period trading mostly sideways for the first 60 days and then declined nearly 11% below its March 15, 2017, level to reach its 52-week low of $30.37 on August 18, 2017. However, after the mid-August bottom, the share price rose with minimal volatility for the remainder of the next 12 months. The only disruption in the share’s uptrend was a 9.5% dip during the overall market pullback in the first week of February 2018.

Nevertheless, the share price recovered from that dip fully by February 15, 2018, to continue rising towards its 52-week high of $45.55 on March 12, 2018, for a total gain of 50% over the 52-week low from August 2017. Over the following two days, the share price declined 2.6% and closed on March 20, 2018, at $44.37, which was 30% higher than it was one year earlier and almost 114% above its price from five years ago.

Cisco Systems has managed to provide its shareholders with a noteworthy income flow from dividend distributions to accompany the company’s asset appreciations in the Technology sector, which is not known for high dividend distributions. The company rewarded its investors with a 36.5% total return on their investment in the past 12 months. The investors fared equally well over the longer periods of the past three and five years with respective total returns of 74% and 131%.

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