How Has Cisco Increased Shareholder Value?



Share repurchases and dividend yield

In fiscal 2Q17, Cisco Systems (CSCO) returned $2.3 billion to its shareholders. This amount included $1 billion in share repurchases and $1.3 billion in dividends. In fiscal 2Q17, the company’s operating cash flow stood at $3.8 billion, with total cash, cash equivalents, and investments of $71.8 billion.

In fiscal 2017, Cisco returned $4.6 billion to its shareholders through share buybacks and dividends, which accounted for 70% of its total free cash flow. Cisco had earlier announced an authorization for an increase of $15 billion to its share repurchase program.

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Dividend yield

Cisco’s dividend yield rose from $0.19 in fiscal 2Q14 to $0.21 in fiscal 2Q15, $0.26 in fiscal 2Q16, and $0.29 in fiscal 2Q17. Cisco increased its dividend yield 10.5% YoY in fiscal 2Q15, 24% YoY in fiscal 2Q16, and 11.5% YoY in fiscal 2Q17. The total rise was 53% over the last three years.

Cisco has a dividend yield of 3.4%, while its technology peers (QQQ) IBM (IBM), Hewlett-Packard Enterprise (HPE), and NetApp (NTAP) have dividend yields of 3.2%, 1.1%, and 3%, respectively.

Cisco’s chief financial officer, Kelly Kramer, said, “We had solid performance in Q2 and managed the business well. We’re making the investments we need to deliver shareholder value over the long term, and we are being very disciplined in driving continuous cost efficiencies.”


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