Cisco Systems Inc's Dividend Analysis

Cisco Systems Inc (NASDAQ:CSCO) recently announced a dividend of $0.39 per share, payable on 2024-01-24, with the ex-dividend date set for 2024-01-03. 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 look into Cisco Systems Inc's dividend performance and assess its sustainability.

Cisco Systems is the largest provider of networking equipment in the world and one of the largest software companies in the world. Its largest businesses are selling networking hardware and software (where it has leading market shares) and cybersecurity software like firewalls. It also has collaboration products, like its Webex suite, and observability tools. It primarily outsources its manufacturing to third parties and has a large sales and marketing staff25,000 strong across 90 countries. Overall, Cisco employs 80,000 employees and sells its products globally.

Cisco Systems Inc's Dividend Analysis

Cisco Systems Inc has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Cisco Systems Inc has increased its dividend each year since 2011. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 13 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.

As of today, Cisco Systems Inc currently has a 12-month trailing dividend yield of 3.07% and a 12-month forward dividend yield of 3.09%. This suggests an expectation of increased dividend payments over the next 12 months.

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Over the past three years, Cisco Systems Inc's annual dividend growth rate was 2.70%. Extended to a five-year horizon, this rate increased to 4.10% per year. And over the past decade, Cisco Systems Inc's annual dividends per share growth rate stands at 9.80%.

Based on Cisco Systems Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Cisco Systems Inc stock as of today is approximately 3.75%.

Cisco Systems Inc's Dividend Analysis

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-10-31, Cisco Systems Inc's dividend payout ratio is 0.47.

Cisco Systems Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cisco Systems Inc's profitability 9 out of 10 as of 2023-10-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.

To ensure the sustainability of dividends, a company must have robust growth metrics. Cisco Systems Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.

Revenue is the lifeblood of any company, and Cisco Systems Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cisco Systems Inc's revenue has increased by approximately 6.20% per year on average, outperforming approximately 55.22% of global competitors.

The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Cisco Systems Inc's earnings increased by approximately 5.90% per year on average, outperforming approximately 38.99% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of 96.10%, which outperforms approximately 99.03% of global competitors.

In conclusion, Cisco Systems Inc's forthcoming dividend, robust dividend growth rate, reasonable payout ratio, and strong profitability and growth metrics all point towards a sustainable dividend strategy that may appeal to value investors. With a consistent track record and a forward-looking growth plan, Cisco Systems Inc remains an interesting consideration for those seeking stable dividend income. Will Cisco continue to maintain its dividend achiever status and reward shareholders in the years to come? For those interested in exploring further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

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.

This article first appeared on GuruFocus.

Cisco Systems Inc CSCO

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