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Is Cisco’s Dividend Yield Better than Its Peers’?

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Strong cash flows

Cisco Systems (CSCO) ended the third quarter of fiscal 2019 with an operating cash flow of $4.3 billion, ~79% higher than the previous year’s quarter, including the payment of $1.3 billion related to one-time foreign taxes. Its cash flow from operations increased 16% excluding the tax payment.

Cash and cash equivalents were $34.6 billion at the end of April, down from $40.4 billion at the end of the second quarter of 2019. The company’s long-term debt was $15.9 billion as of April 27, down from $20.3 billion as of July 28, 2018.

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Cisco returns value to its shareholders

Owing to its strong cash flows, Cisco has regularly been paying dividends to its shareholders and rewarding them with share buybacks. During the quarter, Cisco repurchased ~116 million shares at an average price of $52.14 per share for ~$6.0 billion. The company now has an authorized amount of ~$18 billion remaining for stock repurchases.

The hardware player also paid a dividend of $0.35 per share, or $1.5 billion, in the quarter, higher than the $0.33 per share it paid in the previous quarter. Its quarterly dividend is equivalent to an annual dividend of $1.4 per share in fiscal 2019. Cisco increased its dividend 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 remained at 2.50% as of May 16. Peer companies Hewlett Packard Enterprise (HPE), Ericsson (ERIC), Juniper (JNPR), and NetApp (NTAP) have dividend yields of 3.10%, 1.16%, 2.94%, and 2.30%, respectively.

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