In the video below, senior technology analyst Eric Bleeker discusses Cisco's last quarter and whether the company's dividend has room to grow. Eric notes that while Cisco was up almost 10% yesterday, that was less on the strength of its earnings and more on its willingness to return cash to shareholders through its 75% dividend raise. Cisco now yields about 3%, which puts the company in the league of big-dividend-paying peers Microsoft and Intel.
However, as Eric warns, Cisco has less room than Intel and Microsoft to keep raising its dividend unless U.S. tax rules change and allow Cisco to bring more cash home. So if you're an investor buying on Cisco's big dividend raise, a 3% yield might be near a ceiling, while Microsoft could keep raising its dividend at a 25% clip sustainably over the next couple years.
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The article Can Cisco Keep Its Dividend Growing? originally appeared on Fool.com.
Austin Smith owns shares of Intel. Eric Bleeker owns shares of Cisco Systems. The Motley Fool owns shares of Intel and Microsoft. Motley Fool newsletter services recommend Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.