Understanding Cisco Systems Inc's Upcoming Dividend Payout
Cisco Systems Inc (CSCO, Financial) recently announced a dividend of $0.4 per share, payable on 2024-04-24, with the ex-dividend date set for 2024-04-03. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Cisco Systems Inc's dividend performance and assess its sustainability.
What Does Cisco Systems Inc Do?
Cisco Systems is the world's largest provider of networking equipment and ranks among the world's largest software companies. Its core business revolves around selling networking hardware and software, where it holds leading market shares, and cybersecurity software like firewalls. Cisco Systems also offers collaboration products, including its Webex suite, and observability tools. It outsources manufacturing to third parties and boasts a substantial sales and marketing workforce—25,000 strong in 90 countries. With 80,000 employees, Cisco Systems sells its products on a global scale.
A Glimpse at Cisco Systems Inc's Dividend History
Cisco Systems Inc has a solid track record of dividend payments dating back to 2011, with distributions occurring quarterly. The company has not only consistently paid dividends but has also increased its dividend each year since 2011. This achievement has earned Cisco Systems Inc the status of a dividend achiever, a distinction awarded to companies that have raised their dividends annually for at least 13 consecutive years. A chart illustrating the annual Dividends Per Share can help track these historical trends.
Breaking Down Cisco Systems Inc's Dividend Yield and Growth
As of today, Cisco Systems Inc has a trailing dividend yield of 3.13% over the past 12 months and a forward dividend yield of 3.21%. This indicates an expected increase in dividend payments over the next year. Over the last three years, Cisco Systems Inc's annual dividend growth rate was 2.70%. When extended to a five-year period, the growth rate rises to 4.10% per annum, and over a decade, the annual dividends per share growth rate stands at an impressive 9.80%. Considering the dividend yield and five-year growth rate, the 5-year yield on cost for Cisco Systems Inc stock is approximately 3.83%.
The Sustainability Question: Payout Ratio and Profitability
The sustainability of a dividend is often gauged by the dividend payout ratio, which indicates the proportion of earnings distributed as dividends. Cisco Systems Inc's dividend payout ratio is currently 0.45, suggesting that a substantial part of earnings is retained for growth and to cushion against downturns. The company's profitability rank is a robust 9 out of 10, reflecting strong profitability potential compared to peers. With consistent positive net income over the past decade, Cisco Systems Inc's financial health appears to be solid.
Growth Metrics: The Future Outlook
Cisco Systems Inc's promising growth rank of 9 out of 10 suggests a favorable growth trajectory. The company's revenue per share and 3-year revenue growth rate point to a robust revenue model, with a 6.20% average annual increase. This rate outperforms approximately 57.99% of global competitors. Cisco Systems Inc's 3-year EPS growth rate has averaged 5.90% per year, surpassing about 43.12% of global competitors. Furthermore, the 5-year EBITDA growth rate of 96.10% outperforms approximately 99.19% of global competitors, underscoring the company's strong earnings before interest, taxes, depreciation, and amortization.
Looking Ahead: Dividends and Growth Prospects
In conclusion, Cisco Systems Inc's dividend payments, growth rate, payout ratio, and profitability indicate a stable and potentially growing income stream for investors. The company's solid growth metrics further reinforce the likelihood of sustained dividend payouts. As value investors consider the future prospects of Cisco Systems Inc, they may find reassurance in the company's ability to maintain and possibly increase dividends, backed by a strong financial foundation and growth potential. Will Cisco Systems Inc continue its dividend achiever streak, and what could this mean for long-term investors? For those seeking high-dividend yield stocks, GuruFocus Premium offers the High Dividend Yield Screener as a valuable tool.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
