Cisco to Pay First Ever Dividend

Few stocks have lost as much luster as Cisco (CSCO) has over the past few years. I’ve been continuously disgusted by how much money they’ve wasted on stock buybacks.

Here’s a post from August 2005 where I predicted that Cisco would start paying a dividend:

I’m going to make a prediction. No, not like my other lousy predictions. This time, I’m nearly serious. I predict that Cisco will start paying a cash dividend. Really, it makes perfect sense. The company generates gobs of cash, but they waste it on buying their own stock (just like everyone else who buys Cisco’s stock).

There are two reasons why Cisco buys so much stock. They issue tons of stock, and they give out tons of options to their employees. They bought nearly $20 billion of stock in the last two years and the stock hasn’t done a thing. Forget fighting the market: Just give it to shareholders.

It only took them five-and-half-years to listen to me. Cisco is sitting on a mountain of cash ($40 billion or $7.28 per share). The company announced a six-cent quarterly dividend that will be paid on April 30th to shareholders of record on March 31st.

Posted by on March 18th, 2011 at 10:45 am


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