Why Cisco's Stock Increased by 10% in February (Part 19 of 20)
Cisco raised its dividend by 2 cents
During the fiscal 2Q15 earnings call, Cisco (CSCO) announced that it’s raising its quarterly dividend from $0.19 per share to $0.21 per share. This dividend will be recorded as of April 2 and paid to the company’s shareholders on April 22. This is great news for investors, as holding Cisco stock gives them an opportunity to earn a current dividend yield of 2.95%.
Cisco’s dividend yield is now the highest among its competitors. For example, the dividend yield for EMC (EMC) is 1.72%, while Juniper Networks’ (JNPR) is 1.69% and Brocade’s (BRCD) is 1.13%. This healthy dividend yield makes Cisco an attractive stock for conservative investors.
Cisco’s looking to return cash to shareholders
Cisco also continues to appease its investors through an aggressive share buy-back program. In fiscal 2Q15, Cisco made a share repurchase of $1.2 billion. In total, the company returned $2.2 billion to shareholders, which included $974 million through its quarterly dividends. In the first half of fiscal 2015, Cisco has already returned $4.2 billion, which is about 86% of its free cash flow.
Cisco is also using its cash to make smaller acquisitions. Cisco acquired Tail-f Systems and Metacloud in July last year. More recently, it acquired security consulting player Neohapsis.
If you’re bullish about Cisco, you could invest in the iShares Dow Jones US Technology ETF (IYW). IYW invests about 4.1% of its holdings in Cisco.
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