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What’s the Dividend Yield Capacity of HPE and Its Peers?

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Dividends

Hewlett Packard Enterprise (HPE) spent $154 million to pay a cash dividend of $0.1125 per share in the second quarter of fiscal 2019 as part of the company’s capital return plan of $7 billion through fiscal 2019. In fiscal 2018, HPE paid a dividend of $0.4875 per share, while it paid a dividend of $0.2600 per share in fiscal 2017.

HPE has a dividend yield of 3.07% as of May 24, 2019, and an annualized payout of $0.45, indicating a payout ratio of 29.2%. In comparison, the dividend yields of Juniper (JNPR), NetApp (NTAP), Cisco Systems (CSCO), and Ericsson (ERIC) stand at 3.02%, 3.10%, 2.57%, and 1.02%, respectively.

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HPE consistently rewards shareholders

HPE has been paying its shareholders with cash dividends and share buyback programs for the past several quarters. Hewlett Packard, which along with HP was split from Hewlett Packard Company in 2015, has returned nearly $4.1 billion to shareholders in the form of share repurchases and dividends in fiscal 2018, around $3 billion in fiscal 2017 and $3.1 billion in fiscal 2016.

In the second quarter, HP Enterprise returned $728 million worth to shareholders in the form of dividends and share buybacks, given its strong free cash flows of $402 million driven by improved profits, better working capital management, and lower onetime payments.

As part of the share buyback program, the company has rewarded $1 billion to its shareholders through the repurchase of $574 million worth of shares during the second quarter. HPE now expects to return ~$1.3 billion to stockholders through buybacks in the remaining part of fiscal 2019.

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