How Cisco Systems Increased Shareholder Value


Feb. 14 2018, Updated 9:00 a.m. ET

Dividend per share

In the chart below, you can see that Cisco Systems’ (CSCO) dividend per share has increased at a CAGR (compound annual growth rate) of 14% between fiscal 2013 and fiscal 2017. It has increased from $0.68 in fiscal 2013 to $0.76 in fiscal 2014, $0.84 in fiscal 2015, $1.04 in fiscal 2016, and $1.16 in fiscal 2017.

At the end of fiscal 1Q18, Cisco’s dividend yield was 3%. The dividend yields for peer companies Microsoft (MSFT), Hewlett Packard Enterprise (HPE), Juniper Networks (JNPR), and International Business Machines (IBM) were 3%, 2%, 2.9%, and 4.1%, respectively. Cisco has a dividend payout ratio of 52.3% and has returned 71% of its free cash flow to shareholders in the last fiscal year.

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Cisco’s Shareholder Returns

Acquisitions and organic growth

At the end of fiscal 1Q18, Cisco had 19,000 patents. In fiscal 2017, it spent $6 billion in research and development. The company has acquired 201 companies to date and is looking to grow revenue inorganically to offset declining sales in its mature business segments. Its major acquisitions include AppDynamics, Jasper, Meraki, OpenDNS, and Viptela.

Cisco claims to have more than 300,000 partnerships across various business verticals. They include agreements with technology giants Microsoft (MSFT), Apple (AAPL), International Business Machines, and Google (GOOG).


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