21 Nov

How Does Cisco Increase Shareholder Value?

WRITTEN BY Aditya Raghunath

Share repurchases and dividend yield

In fiscal 1Q17, Cisco (CSCO) returned $2.3 billion to shareholders. The $2.3 billion included $1 billion in share repurchases and $1.3 billion in dividends. In fiscal 1Q17, operating cash flows for Cisco stood at $2.7 billion with total cash, cash equivalents, and investments of $71 billion.

For fiscal 2016, operating cash flow rose 8% YoY (year-over-year) to a record $13.6 billion with FCF (free cash flow) of $12.4 billion. In fiscal 2017, Cisco returned $8.7 billion to shareholders through buybacks and dividends, which accounted for 70% of the firm’s total free cash flow. Cisco had earlier announced an authorization increase of $15 billion for its share repurchase program.

How Does Cisco Increase Shareholder Value?

Dividend yield

Cisco’s dividend yield rose from $0.17 in fiscal 1Q14 to $0.19 in fiscal 1Q15, $0.21 in fiscal 1Q16, and $0.26 in fiscal 1Q17. Cisco increased its dividend yield 11.8% YoY in fiscal 1Q15, 10.5% YoY in fiscal 1Q16, and 24% YoY in fiscal 1Q17. The total increase was 53% over the last three years.

Cisco has a dividend yield of 3.3%, while IBM (IBM), HPE, and NetApp (NTAP) have dividend yields of 3.6%, 1.1%, and 3%, respectively.

The CFO of Cisco, Kelly Kramer, stated, “We’re committed to making the key strategic moves in disciplined investments to drive long-term financial performance and deliver shareholder value.”

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