Cisco stock resets dividend payout as AI moat widens

Cisco Systemsrecently raised its quarterly dividend by a penny to $0.42 per share, signaling assurance successful its increasing relation wrong the AI infrastructure buildout.

The determination came arsenic the Dow Jones 30 banal posted grounds revenue and guided fiscal 2026 to beryllium its strongest twelvemonth (ending successful July) to date.

But Cisco (CSCO) banal dropped astir 12% pursuing its quarterly results, adjacent arsenic its Q2 net surpassed statement estimates. The market's absorption centered connected gross borderline pressure and guidance that met lone current-quarter estimates.

However, Cisco is positioned astatine the center of a once-in-a-generation exertion shift, with hyperscalers ordering billions of dollars successful networking instrumentality and optics to powerfulness AI information centers.

The dividend summation to $0.42 per 4th represents Cisco's committedness to returning astatine slightest fractional of escaped currency travel to shareholders annually.

The networking elephantine returned $3 cardinal to shareholders successful the 2nd 4th done dividends and buybacks.

Given an annualized dividend payout of $1.68 per share, Cisco offers a guardant output of 2.2%.

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According to information from Fiscal.ai, Cisco has accrued its yearly payout from $0.24 per stock successful 2011. Over the past 15 years, its dividend has grown astatine a 13.9% compound yearly maturation rate.

Cisco’s yearly dividend disbursal is astir $6.63 billion, portion its escaped currency travel is projected astatine $13.64 cardinal successful fiscal 2026, indicating a payout ratio of 48.60%.

Analysts forecast FCF to grow to implicit $19 cardinal by fiscal 2030, which should enactment aboriginal dividend hikes.

• Quarterly dividend: $0.42 per stock (up from $0.41)

• Annual dividend: $1.68 per share

• Dividend yield: Approximately 2.2% (based connected caller banal price)

• Payout ratio: Roughly 49% of FCF

• Free currency travel return: Minimum 50% yearly commitment

• Q2 superior returns: $3 cardinal ($1.6 cardinal dividend, $1.4 cardinal buybacks)

• Year-to-date returns: $6.6 billion

• Remaining buyback authorization: $10.8 billion

Cisco's 2nd 4th of fiscal 2026 delivered results that fewer networking companies tin lucifer close now. Revenue jumped 10% twelvemonth implicit twelvemonth (YoY) to $15.3 billion, portion earnings per stock (EPS) climbed 11% to $1.04.

The institution present expects to instrumentality AI infrastructure orders exceeding $5 cardinal successful fiscal 2026, up from a anterior estimation of astir $4 billion. During the 4th alone, hyperscalers ordered $2.1 cardinal successful AI cogwheel — matching the full fiscal 2025 total.