How Has Cisco Increased Its Shareholder Value?



Share buybacks and dividend yield

Cisco (CSCO) pays a dividend of $1.40 per share, which amounts to a dividend yield of 2.6% and a payout ratio of 52.4%. Cisco has now increased its dividend payout for the last eight consecutive years. Cisco’s dividend has grown at a CAGR (compound annual growth rate) of 16.0% in the last three years and by 13.3% in the last year.

Cisco repurchased stock worth $17.5 billion in fiscal 2018 and paid out $6 billion in the form of dividends to its shareholders.

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How does Cisco use its cash?

Cash and cash equivalents for Cisco in fiscal 2018 fell to $8.9 billion from $11.7 billion in fiscal 2019 due to the company’s capital return program. It also reduced its debt by $8.0 billion and paid $3.0 billion for acquisitions.

Cisco used 50% of its cash for share repurchases, 23% for debt repayment, 17% for dividend payments, 8% for acquisitions, and 2% for capex.

Growth via acquisitions

Cisco acquired eight companies in fiscal 2018. Its large cash pile enables it to achieve inorganic growth. In July 2017, Cisco acquired Viptela and Observable, and it acquired Springpath in September 2017, Perspica in October 2017, and Cmpute.io in December 2017.

To expand its reach in the applications space, Cisco acquired Broadsoft and Accompany last year. Cisco is looking to expand its subscription-based offerings to increase its proportion of recurring revenue.


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