Cisco Systems Pays Seven Years of Rising Dividends (CSCO)
By: Ned Piplovic,
Cisco Systems, Inc. has rewarded its shareholders with seven years of rising dividends at double-digit percentages and currently offers a 3% yield, which is significantly above the industry’s average yields.
In addition to years of rising dividends, Cisco Systems offered its investors asset appreciation in excess of 25% over the last year. The combination of the rapidly rising dividends and share price growth resulted in a total return on investment of nearly 30% over the last 12 months.
The company will pay its next dividend distribution on January 24, 2018, to all its shareholders of record before the next ex-dividend date, which is set for January 4, 2018.
Cisco Systems, Inc. (NYSE: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 worldwide. With nearly 16,000 employees in the San Jose area, Cisco Systems is the largest private employer in Silicon Valley and 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, collaboration endpoints 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 and advanced services.
The company’s current $0.29 quarterly dividend payout is 11.5% higher than the $0.26 quarterly dividend from the same period last year. This current $0.29 dividend amount converts to a $1.16 annualized dividend for 2018 and translates to a 3% dividend yield. Compared to the 1.24% average dividend yield of the Technology sector, the current 3% yield is 142% higher. Additionally, Cisco Systems’ current yield is more than five times higher than the 0.58% average yield of all the companies in the Networking & Communications Devices segment.
The company has boosted its annual dividend amount every year since it started paying dividends in 2011. Over that period, the company grew its annual dividend payout at an average rate of 25.5% per year. The result of this above-average annual growth rate is a 383% annual dividend growth over the past seven years. Based on history of company’s dividend hikes over the past few years, we can expect another quarterly dividend hike of at least 10% in the next period.
The share slid down nearly 2% in the first month of its trailing 12-month period and reached its 52-week low of $30.03 on January 18, 2017. However, by February 2, 2017, the share price was 13.7% above the 52-week low and continued to trade between $32.50 and $34.50 for the next three months.
However, in mid-May the share price dropped 9% over a three-day period and continued to fall until August 18, 2017, when the share price reached $30.37, which was within 1% of the 52-week low from January. After that slump, the share price rose 27.6% without any significant volatility and reached its new 52-week high of $38.74 on December 20, 2017. The December 20, 2017, closing price is also the company’s highest share price since January 2001 and is double the share price from five years ago.
While technology companies are not known for high dividend distributions, Cisco Systems manages to provide its shareholders a noteworthy income flow from dividend distributions to accompany the company’s asset appreciations. Just over the last year, the shareholders received a 29.2% total return on their investment, with a 49.6% total return over the last three years and a total return of 111% over the last five years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.