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How Cisco Is Returning Value to Shareholders

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Strong cash flows

Cisco Systems (CSCO) ended the second quarter of 2019 with an operating cash flow of $3.8 billion, down 7% YoY. The figure includes the payment of $0.8 billion related to a transition tax payment. Cash flow from operations increased 12% excluding the tax payment.

Cash and cash equivalents were $40.4 billion at the end of January, down from $42.6 billion at the end of the first quarter. The company’s long-term debt declined to $15.9 billion at the end of January 26 from $20.3 billion at the end of July 28, 2018.

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Cisco returns value to its shareholders

Owing to strong cash flows, Cisco has regularly been paying dividends to its shareholders and rewarding them with share buybacks. During the quarter, Cisco repurchased approximately 111 million shares at an average price of $465.09 per share for an approximate price of $5.0 billion. Cisco also added $15 billion to its share buyback authorization program. The company now has around $24 billion remaining for stock repurchases.

The hardware player also raised the quarterly dividend by 6% to $0.35 per share in the quarter, which will be paid on April 24, 2019, to all shareholders of record as of April 5, 2019. The new quarterly dividend will be equivalent to an annual dividend of $1.4 per share in fiscal 2019. Notably, Cisco has increased dividends paid per share from $0.94 in fiscal 2016 to $1.10 in fiscal 2017 and $1.24 in fiscal 2018.

Dividend yield

Cisco’s dividend yield is 2.95% as of February 13. Peer companies Hewlett Packard Enterprise (HPE), Ericsson (ERIC), and Juniper (JNPR) have dividend yields of 2.80%, 1.17%, and 2.84%, respectively.

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