Say Hello to Cisco's Newborn

Assuming that the $0.06 payout per share stays stable over the first year, we're looking at a dividend yield of about 1.4% at today's share price. With about 5.5 billion shares outstanding, this amounts to an annual cost of about $1.3 billion or just under 15% of Cisco's free cash flow in 2010. Considering that the company already spent some $9 billion over the last 12 months to buy back its own shares, Cisco seems quite committed to returning value to shareholders. And before you start complaining about the company's stock-based compensation programs eviscerating the value of those buybacks, you should also know that Cisco issued $3 billion in new shares over the same period. Most of the buybacks really do achieve something more than just staying afloat.... Read more